Bangladesh had 35.60 percent urban-rural electrification rate divide during 2000-2022 period, the highest rate among south Asian nations, excluding Afghanistan, finds a new study of the Bangladesh Institute of Development Studies (BIDS) unveiled on Monday.
Bhutan was placed second with 32.20 percent divide and Nepal was in the third position with 30.02 percent divide.
The lowest divide of 5.60 percent was found in the Maldives, according to the study: ‘Macroeconomic Factors Influencing Urban-Rural Divide in Electrification Rates in South Asia,’ conducted by Muntasir Murshed, a BIDS research fellow.
It was 10.43 percent in Sri Lanka followed by Pakistan with 17.36 percent divide and India with 22.24 percent.
In 2022, almost 33 million people in this region had no access to electricity among which around 24.4 million or 74.16 percent were rural residents, according to the study that analysed a World Bank survey data of 2024.
“It is more important to enhance rural electricity accessibility rates at a relatively faster pace compared with the rate at which urban electricity accessibility is enhanced,” said BIDS researcher Muntasir Murshed.
“This calls for policy formulations that can eliminate the traditional urban-rural divide in electrification rates,” he added.
The study taken into account macroeconomic factors like access to formal credit, remittance inflow, institutional quality or control of corruption, the flow of foreign direct investment (FDI), inflationary pressure and urban-rural pollution growth differential.
It highlighted that more access to formal credit, better corruption controlling capacities, FDI attraction and taming inflation reduce urban-rural electrification divides.
But more receipts of foreign remittances and larger differences between urban and rural population growth rates were found responsible for widening the urban-rural electrification rate divide further.
Rural electrification rates are positively influenced by corruption control, FDI attraction, and rising inflationary pressures but negatively influenced by more formal credit access, foreign remittance receipts, and rising disparity between urban and rural population growth rates.
However, inflation is the only macroeconomic factor responsible for boosting urban electrification rates in South Asia.
The study finds that if domestic private credit increases by 1 percent of GDP, the divide drops by 0.4 percentage points, while GDP’s 1 percent increase in remittance inflow widens the gap by around 2.5 percentage points.
It says improving institutional quality by effectively controlling corruption reduces the urban-rural divide in electrification rate.
By a 1 percent increase in corruption control index, the gap is expected to narrow by 4.6 percent, while GDP’s 1 percent additional FDI can reduce the gap by 0.5 percentage points.
Additionally, if urban population grows 1 percent more than rural population, the divide widens by 5.4 percentage points.
However, a rise in inflation by 1 percent, the gap tends to decline by around 0.3 percentage points.
“Policymakers in South Asia should take note of the findings when designing action plans for eliminating discrepancies between urban and rural electrification rates,” stated Muntasir.
The study calls for financial policy reforms, especially in rural areas, upskilling rural migrants to fetch more remittances, wooing more energy sector related FDIs, while curing institutional corruption as well as inflation to squeeze the divide in electrification rate in South Asia.
