Are the energy poor also income poor? Evidence from India

The energy poverty line is defined as the threshold point at which energy consumption begins to rise with increases in household income. This approach is applied to cross-sectional data from a comprehensive 2005 household survey representative of both urban and rural India. The objective is to determine if the energy poor are also income poor and whether and how energy policies help reduce energy poverty, independent of income. The findings suggest that in rural areas some 57% of households are energy poor, versus 22% that are income poor. But in urban areas the energy poverty rate is 28% compared to 20% that are income poor. That is, energy policies are expected to play some roles in mitigating energy poverty. We find that reducing energy poverty requires not only support for rural electrification, but also more use of modern cooking fuels such as LPG. While income growth matters, a combination of energy related programs can play an independent and substantial role in reducing energy poverty.