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Thesis a Kooijman Van Dijk Annemarije L. Annemarije Dijk Kooijman-van to The Produce Power The potential of modern energy to contribute to increasing incomes for the poor in developing The Power to Produce countries is widely recognized, and the topic The role of energy in poverty reduction through is receiving increasing attention both from the small scale enterprises in the Indian Himalayas perspectives of poverty reduction and from the perspective of increasing the financial feasibility of supplying modern energy infrastructure to rural areas. However, understanding of the mechanisms Annemarije L. Kooijman-van Dijk that link energy supply to income generation and of the circumstances and factors that contribute to positive outcomes are lacking. This research provides such understanding based on empirical evidence from fieldwork in India. By taking the perspective of the entrepreneurs in small scale enterprises in rural areas where an energy supply infrastructure is available at village level, the factors that play a role in decisions to use modern energy in small scale enterprises and the mechanisms that influence the impacts of modern energy in the enterprises are uncovered. The understanding of factors and mechanisms leads to recommendations for policy development and for implementation of policy both in the field of energy supply and of business support, to increase the impacts of modern energy supply on income generation by the poor. ISBN 978 90 365 2771 2 THE POWER TO PRODUCE THE ROLE OF ENERGY IN POVERTY REDUCTION THROUGH SMALL SCALE ENTERPRISES IN THE INDIAN HIMALAYAS PROEFSCHRIFT ter verkrijging van de graad van doctor aan de Universiteit Twente, op gezag van de rector magnificus, prof. dr. W.H.M Zijm, volgens besluit van het College voor Promoties in het openbaar te verdedigen op vrijdag 19 december 2008 om 13.15 door Annemarije Louise Kooijman - van Dijk geboren op 20 januari 1972 te Utrecht Dit proefschrift is goedgekeurd door de promotor: Prof. dr. N.G. Schulte Nordholt en de assistent-promotor: Dr. J. S. Clancy Samenstelling promotiecommissie: Voorzitter: Prof.dr. P.J.J.M. van Loon Universiteit Twente Secretaris: Prof.dr. P.J.J.M. van Loon Universiteit Twente Promotor: Prof.dr. N.G. Schulte Nordholt Universiteit Twente Ass. Promotor: Dr. J.S. Clancy Universiteit Twente Leden: Prof.dr. W. van Rossum Universiteit Twente Prof.dr. ir. T. H. van der Meer Universiteit Twente Prof.dr. T.S. Papola, Institute for Studies in Industrial Development, New Delhi, India Prof.dr. M.P. van Dijk UNESCO/IHE, Delft Referent: Dr. A.H.M.E. Reinders Universiteit Twente In de reeks Schone technologie en Milieubeleid worden milieuvraagstukken belicht vanuit wetenschappelijke visies op overheidsbeleid, technologie en management. Deel 1 De effectiviteit van gemeentelijke milieubeleidsplanning F.H.J.M. Coenen Deel 2 Bevordering van milieumanagement in organisaties T.J.N.M. de Bruijn en K.R.D. Lulofs Deel 3 The feasibility of Dutch environmental policy instruments Josee J. Ligteringen Deel 4 25 jaar milieubeleid in Nederland: instrumenten, incidenten en effecten R.A. van de Peppel, P-J. Klok en D. Hoek Deel 5 The endurance of Mexican Amate Paper R. Citlalli López Binnquist Deel 6 Sustained Diffusion of Renewable Energy Valentina Dinica Deel 7 Water Governance and Institutional Change Stefan M.M. Kuks Deel 8 Innovation and Institutional Change Peter S. Hofman Deel 9 Transparancy in the Food Chain Agni Kalfagianne Deel 10 Land Markets and Public Policy Wilbert Grevers Deel 11 Corporate Social Responsibility and Public Policy-Making Arno Mathis Deel 12 Private Equity; Public Principle David Regeczi Deel 13 Understanding how actors influence policy implementation Katharine A. Owens Deel 14 Geruisloos Beleid Derek Jan Fikkers Deel 15 The Power to Produce Annemarije Kooijman-Van Dijk THE POWER TO PRODUCE The role of energy in poverty reduction through small scale enterprises in the Indian Himalayas Annemarije L. Kooijman – van Dijk Colofon Vormgeving omslag: deel 4 ontwerpers, Jo Molenaar Beeldmateriaal: Annemarije Kooijman Druk en uitgave: Universiteit Twente / CSTM © Annemarije Kooijman-Van Dijk, Universiteit Twente / CSTM Niets uit deze uitgave mag worden vermenigvuldigd door middel van druk, fotocopie of welke andere wijze ook zonder schriftelijke toestemming van de auteur. ISBN 978-90-365-2771-2 Content List of tables, figures, boxes, and photos i List of Abbreviations and terminology v Preface ix 1 Introduction 1 1.1 Does energy supply lead to poverty reduction? 3 1.2 Defining the research question 5 1.3 Research approach 8 1.4 Evidence from the Indian Himalayas 11 1.5 Guide to the structure of this thesis 13 2 A literature review on the role of energy in poverty reduction through small scale enterprises in rural areas 17 2.1 Introduction 19 2.2 The role of energy in poverty reduction 20 2.3 Energy as an innovation 34 2.4 Rural enterprises and poverty reduction 39 2.5 Adapting the livelihoods framework 43 2.6 Refined questions and research framework 55 3 An introduction to the rural enterprises and their context in the Indian Himalayas 59 3.1 Introduction 61 3.2 India and the states of Himachal Pradesh, Uttarakhand and West Bengal 61 3.3 The village clusters 82 3.4 The enterprises 91 4 Energy uptake, uses and impacts 97 4.1 Introduction 99 4.2 Energy uptake for uses and services 100 4.3 Connections between uptake and impacts 110 4.4 Impacts of energy uptake in enterprises 114 4.5 Conclusions 137 5 Uptake and impacts: issues of energy supply 141 5.1 Introduction 143 5.2 Adoption: a matter of physical supply and time? 144 5.3 The influence of fuel prices 151 5.4 The influence of quality of supply of fuels 158 5.5 The influence of electricity price 160 5.6 The influence of quality of supply of grid electricity 165 5.7 The influence of electricity supply from renewable energy sources 171 5.8 Energy supply from the perspective of institutions 174 5.9 Conclusions 180 i Content 6 Uptake and impacts related to assets of the entrepreneur 183 6.1 Introduction 185 6.2 Financial and physical assets 186 6.3 Human assets 205 6.4 Social assets 217 6.5 Issues of caste, tribe, religion and gender 227 6.6 Conclusions 240 7 Uptake and impacts related to markets 245 7.1 Introduction 247 7.2 Markets targeted by rural entrepreneurs 248 7.3 Income levels of local markets 259 7.4 Market size and location 265 7.5 Market trends 274 7.6 Entrepreneurs’ assets to access markets 277 7.7 Conclusions 278 8 Institutional support for small scale enterprises 283 8.1 Introduction 285 8.2 Institutional context for finance and financial support 286 8.3 Institutional support for enterprise training 294 8.4 Institutional support for marketing 296 8.5 Cluster development 297 8.6 Effectiveness of the supporting actors 299 8.7 Conclusions 304 9 Conclusions 307 9.1 Introduction 309 9.2 Main findings 309 9.3 Recommendations 317 9.4 Learning from studies across the globe 320 9.5 Reflections and recommendations for research 324 9.6 Final remarks 326 References 329 Summary 343 Summary in Dutch 351 Annex 1: Statistical data 357 Annex 2: The Swaranjayanati Gram Swarozgar Yojana (SGSY) Scheme 364 Annex 3: Village cluster descriptions 365 Annex 4: Locational choices and transport costs 382 ii List of tables, figures, boxes, and photos List of tables Table 3.1 Indicative distances between village cluster and nearest larger town 83 Table 3.2 Village clusters area characteristics 83 Table 3.3 Village cluster population 85 Table 3.4 Village clusters indicators of levels of wealth 89 Table 3.5 Interviewed enterprises per sector 93 Table 3.6 Enterprises per category of scale 95 Table 4.1 Uptake of energy carriers in the research enterprises 101 Table 4.2 Categories of use for electricity in the research enterprises 102 Table 4.3 Uses of electricity per sector 102 Table 4.4 Combinations of uses of energy carriers for heating 106 Table 4.5 Electricity uses for scales of operation 110 Table 4.6 Energy carriers for heating for scales of operation 110 Table 4.7 Potential benefits of modern energy appliances 111 Table 4.8 Incomes from enterprise for electricity use categories 121 Table 4.9 Electricity uses for income groups 122 Table 4.10 Tailor enterprise categories using electric sewing machines 128 Table 4.11 Incomes from enterprise for diesel-, electric-, and water-powered flourmills 130 Table 5.1 Electricity uses according to period since electrification 147 Table 5.2 Ranges of prices for fuels 152 Table 5.3 Electricity tariffs in Himachal Pradesh, Uttarakhand and West Bengal 161 Table 5.4 Quality of electricity supply in villages 166 Table 5.5 The co-occurrence of traditional hydro powered and diesel/electric powered flourmills in research village clusters 172 Table 6.1 Electricity uses by financial starting position 188 Table 6.2 Uptake of fuels for enterprise products and services by financial starting position 188 Table 6.3 Fuel uses by financial starting position in the sector chai dhaba and sweets 189 Table 6.4 Investments in machines and appliances by financial starting position 190 Table 6.5 Location of enterprises for local and non-local entrepreneurs 199 Table 6.6 Sources of funding accessed by entrepreneurs by level of investment 201 Table 6.7 Financial starting position and sources of finance for loans 202 Table 6.8 The update of electric appliances in enterprises for different levels of education 210 Table 6.9 Uses of electric appliances in the sector carpentry and masonry for different levels of education 212 i List of tables, figures, boxes, and photos Table 6.10 Purposes of use of electricity in the
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