Demand-Side Determinants of Billing Efficiency in India: A Panel GMM Approach

Abstract

The power sector’s efficiency is paramount in a country such as India, where electricity consumption and access have been tantamount to economic growth. The study investigates whether Billing Efficiency is affected by Per Capita GSDP. A panel has been constructed using data from 17 major states from 2011-12 to 2021-22. The results, obtained using the Generalized Method of Moments (GMM) regression, suggest that Billing Efficiency increases when there is an increase in Per Capita GSDP. People’s affinity to evade paying the bill decreased when their incomes rose. Per Capita Consumption of Power, which the study considered the control variable, exhibited no impact on Billing Efficiency. Estimates indicate an increase of Rs. 10,000 per annum in Per Capita GSDP will increase Billing Efficiency by 0.31%. High-income states showed higher billing efficiency; the intuitive opposite was true for low-income states. As best practice, long-term investment in infrastructure can be a robust solution to reduce the leakages in Input Energy gradually.