Emerging regulatory challenges facing the Indian rural electrification programme

The purpose of this paper is to present and analyse the regulatory issues emerging from the newly launched programme of rural electricity access in India. We focus on two broad areas, namely regulatory issues related to the organisation/structuring of the activities and issues related to subsidy and tariffs. The paper looks into the alternative organisational arrangements being used by the programme and identifies problem areas through a responsibility mapping. The tariff principle being followed by the programme is then analysed considering the alternative organisational forms and issues related to such pricing policies are identified. Possible alternative pricing options are then suggested. The paper finds that while the franchisee model is an innovative idea, it raises issues that the regulators should be concerned with. The programme has so far relied on the simplest franchisee model because of its ease of implementation but a transition to more complex alternatives would require careful considerations.