Skip to main content

Unbundling the Load: How Electricity Restructuring Affects the Manufacturing Sector

Meera Mahadevan, Postdoctoral Scholar, UCSB emLab

May 4 2020 | 11:00am to 12:00pm Pacific Online

Meera Mahadevan
Meera Mahadevan

Meera is a rising development economist. Her work combines novel data and complex political realities to help improve the provision of energy in lower-income countries. We are thrilled to have Meera share results from her recent research conducted as a postdoctoral fellow here at emLab.  — Vincent Thivierge, Bren School PhD Student

ABSTRACT

The Indian power sector was comprised of state-owned, vertically-integrated firms that accrued massive losses. Between 1998 and 2003, a number of electricity reforms were phased in, which sought to make the electricity sector more competitive and efficient. I use an event-study framework to study the effect of these reforms on the manufacturing sector, one of the biggest consumers of electricity in India. The reforms affected manufacturing firms via two main channels: the price per unit of electricity and the quality of electricity. Surprisingly, while many expected states with multiple distributors to benefit consumers, I find instead that states with a single distributor supplied more reliable access to energy. Single distributors found it easier to raise prices and recoup their costs, reflecting political realities. Despite a price increase, firms respond to decreased blackouts (greater reliability) by increasing purchased electricity, worker hours, and worker productivity. I find corroborating evidence of greater electrification using luminosity data (satellite night lights) that shows an increase in light density in these particular states.

BIO

Meera Mahadevan is a postdoctoral associate with the Environmental Market Solutions Lab (emLab) at UCSB. She completed her PhD in Economics at the University of Michigan in 2019. Her research is focused on energy and environmental issues in developing economies, and the political economy of energy provision. Prior to her PhD, she worked for the Poverty and Equity unit at the World Bank after completing an MS in Economics for Development at the University of Oxford. Meera grew up in India and a lot of her research is inspired by her experiences with electricity and water provision.