Evaluation of Indian power sector reform strategies and improvement direction though DEA

This paper evaluates relative performances of power distribution utilities of 28 states of India for the year 2012–13, through application of Data Envelopment Analysis (DEA). Benchmark utilities have been identified for each non-frontier utilities to emulate the best practices for improvement. Further slack analysis is carried out to identify the root causes of inefficiencies of the utilities lying away from the frontier. About 86% of the distribution utilities are found to be digressing from efficiency frontier. The main cause of the inefficiencies is observed to be excessive distribution line length compared to the revenue realized and number of consumers served by those. Specific recommendations have been made for the policy level changes required for improving the overall performance of the distribution utilities and socio-economic standing of the rural population of India.