Poverty Amidst Plenty: Limits of Generation Bias and State Allocation in Madhya Pradesh’s Power Sector

By Ashwini K Swain
Regulatory Assistance Project
26 May 2017

Despite phenomenal growth in power availability, Madhya Pradesh continues to struggle with high-level energy poverty. Two decades after the state-initiated distribution reforms, the power utilities are still grappling with past problems. Institutional restructuring, which unfolded over 11 years, resulted in a complex institutional architecture that provides the state government with systematic control over the sector. By prioritizing an increase in the amount of power available, the state has undermined access and affordability and thus reinstated an economic divide in society. On the operational side, the utilities still face high losses and poor billing and collection, which results in high dependency on the state government for bailouts.

Against this backdrop, this paper for the Mapping Power project analyses the power sector reform trajectory in the state to examine policy choices and outcomes. It also looks at the political-economic drivers for these policy choices and how they deviate from or comply with signals from India’s central government. Drawing on the findings, the paper seeks to explain the limits of generation bias and state allocation, and examine how intensive institutional restructuring has resulted in consolidated state control over the sector. Finally, it analyses the implications of past experiences and the prevailing context for ongoing and future reforms.