Does (better) electricity supply increase household enterprise income in India?

Electricity access is an important driver of economic development. Previous studies treat electrification as a binary outcome. In reality, in developing countries households with access face chronic supply interruptions, which can last up to 12 ha day. This is the first study to estimate the income differences in urban and rural non-farm enterprises in Indian households with different levels of electricity supply, using a subset of 8125 households in the India Human and Development Survey, a cross-sectional national sample of 41,554 households. I use multiple econometric approaches, including linear regression with an instrument variable and propensity-score matching with multiple treatment levels to represent supply availability. I find a robust income effect of access, and suggestive evidence of the effect of better supply availability. The aggregate income impact across existing NFEs in India of improving supply to 16 h a day could be on the order of 0.1 percent of GDP. (C) 2013 Elsevier Ltd. All rights reserved.