Household energy access and expenditure in developing countries: Evidence from India, 1987-2010

Although most studies of energy poverty focus on whether or not households have access to modern fuels, expenditure is also an important issue, as households in developing countries spend a significant proportion of their total expenditures on energy. Using nationally representative household data from India, 1987-2010, this article describes and explains trends in household energy expenditure. While monthly household spending on energy has increased in many Indian states, this change is not driven by increased household affluence. Statistical analysis shows that when modern fuels (LPG for cooking, electricity for lighting and appliances) are available, households are willing and able to spend on energy. Indian households that have seen improved access to LPG and electricity have also seen much higher energy expenditures, whereas increased household incomes do not explain greater spending on household energy. For policymakers, the key lesson is that programs to improve access to modern fuels allow both wealthy and poor households to spend money on valuable energy services.