Electricity Supply and Economic Growth: Evidence from a Large Experiment in Bihar

Working Paper
Published on 7 May 2023


We conduct a large-scale randomised experiment with two electricity distribution companies in the state of Bihar in India, to test the impact of a new power allocation rule on consumer payment rates and firm outcomes. We find small, positive effects of the assignment to the allocation rule on distribution companies’ revenue, but these effects are not statistically different from zero. In terms of firm outcomes, our estimates suggest that one hour of additional power supply increases electricity-using capital by INR 531 on average on a base of INR 1690, but does not affect non-electricity using capital – with notable differences between economic sectors. However, the low compliance with the new rule that we observe means that these estimates are only suggestive of a causal link between electricity supply and profits.


Robin Burgess

London School of Economics

Michael Greenstone

University of Chicago

Nicholas Ryan

Yale University

Anant Sudarshan

University of Chicago