Electricity tariffs in India: an assessment of consumers’ ability and willingness to pay in Gujarat

A sample of electricity consumers covering agricultural, residential and industrial consumers in the Indian State of Gujarat was surveyed in 1997 to investigate the consumers’ ability and willingness to pay for electricity supplied from the grid. The ability to pay was estimated using the weight of the cost of electricity to meet at least the basic household needs in relation to the overall income or expenditure. The willingness to pay was estimated using the costs of meeting the needs by alternative sources of energy, namely diesel in the case of farmers to pump water for irrigation and captive power generation using diesel generators in the case of industrial users. Survey results reveal the proportion of consumers in different categories, which do not have the ability to pay more or are even not willing to pay more for electricity. The survey findings have been used as a guideline in the proposed adjustment of tariffs charged by the Gujarat Electricity Board.