| This paper is an empirical analysis of sectoral electricity consumption in the state of Maharashtra, India. Using monthly data from April 1991 to March 2006, cointegration and error correction models are used to estimate short-run and long-run price and income elasticities in the agricultural, residential, commercial and industrial sectors. Results confirm a positive and significant relationship between electricity consumption and sectoral income, and a negative and significant relationship between electricity tariffs and electricity consumption, with long-run elasticities to be higher in absolute value than the short-run. The commercial and industrial sectors are found to be relatively price-elastic compared to the residential and agricultural sector, while the industrial and residential sectors are more income elastic compared to the other two sectors. Elasticities obtained have several policy implications affecting effectiveness of cross-sector subsidies as a social transfer mechanism. |
