Managing agricultural and non-agricultural grid electricity supply through feeder segregation is being highlighted as an innovative reform to address India¡¯s electricity supply issues. While this has a direct implication on the availability of grid electricity for farm operations, there is no rigorous empirical evidence available on the effects of feeder segregation on farm households. This paper exploits exogenous variation in quantity and quality of farm electricity supply resulting from Gujarat¡¯s feeder segregation program, ¡°Jyotigram Yojana¡± (JGY), and examines its impact on farm households. Using the 2004- 05 and 2011-12 India Human Development Survey (IHDS) data and applying a difference-in-differences framework, we analyse the impact of rationed but high-quality farm electricity supply on investments in fixed and variable farm inputs and net farm income per acre. We find that, on average, JGY does not lead to an increase in ownership of electric pumps. However, it decreases ownership of diesel pumps. On average, farmers own more tubewells as exposure to JGY increases. In particular, it is the medium-to-large farmers who significantly increase ownership of tubewells. There is a corresponding statistically significant increase in the likelihood of irrigating with a tubewell for farmers across all land sizes. This is accompanied by an increase in per acre cost of purchased water for irrigation for farmers across land sizes. The consequent effect on net farm income per acre on average is a statistically significant decrease, which is more pronounced for medium-to-large farmers. This seems to be driven mainly by an increase in cost of purchased water for irrigation as we do not observe an increase in labor cost or increase in investments in other farm inputs including fertilizers, pesticides, and tractors. Using supplementary analysis we also rule out lower crop yields as the mechanism underlying decreased net farm income.
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