Low population densities and limited demand for electricity, along with high capital costs for expanding the network to rural areas, makes rural electrification unattractive.
There is an increase of 206 percent in rural electrification expenditure in FY05 over FY04, reflecting government's priority to expand electricity supply to all rural areas.
According to an official report, this increase in investment in rural electrification resulted in 74 percent of rural population using electricity for lighting as given in the PSLM 2004-05. Under rural electrification programme 15,000 villages will be electrified during 2003-04 to 2005-06 period.
It will facilitate (a) the establishment of agro-based and cottage industries which will help in economic uplift, poverty alleviation and job opportunities, (b) the improvement in the living standard of rural population utilising electric appliances and access to television, (c) the increased pumping of sub-soil water for domestic and agricultural purposes that will enhance productivity, (d) the provision of support to rural women in terms of labour, and (e) the reduction in rural/urban inequities and slowing down of the migration of rural population to urban areas.