The determinants of electricity theft: An empirical analysis of Indian states

More than 20% of the electricity generated in India is lost to rampant thefts. Drawing data from 28 states of India over a time span of five years (2005-2009), this paper examines the role played by socio-economic and governance factors in determining the extent of electricity thefts in Indian states. Results from the Feasible Generalised Least Squares (FGLS) model demonstrate that lesser corruption, higher state tax to GDP ratio, greater collection efficiency of electricity bills by state utilities, higher share of private installed capacity, lesser poverty, greater literacy and greater income are closely associated with lesser power thefts. A better understanding of the key determinants of thefts in electricity distribution is vital for policy makers for designing policies.