The power sector is widely viewed as one of the biggest constraints on India’s economic growth. Almost half of power drawn from the grid is not paid for and in unmetered, unbilled or pilfered. In the state of Bihar, 45% of power consumed falls in this category. The Government of Bihar is trying to address this problem and expand access to electricity by implementing reforms to improve the Bihar State Electricity Board’s finances and the availability of power.

In partnership with the government of Bihar, this study is using randomised experiments to test if an innovative group collective incentive can be used to increase payment rates, thus reducing distribution losses and enabling the utility to expand electricity supply. The pilot scheme links amount of electricity supplied to groups of industrial and residential consumers is tied to the groups’ overall performance in paying for the electricity they consume. As the proportion of electricity bills paid increases, the hours of electricity supplied to that community also increases. Ultimately where the community ends up on this schedule depends on how much they value a higher quality of electricity supply.