Author
Fouzia SOHAIL* and Lubna NAZ*
Abstract
This study aims to investigate the effect of the price increase of electricity on the well-being
of households at various income levels. More precisely, the study endeavours to determine
the crowding-out impact of increased electricity tariffs on households’ budgetary allocation
of resources to different income groups. This study uses the Household Income and Expenditure
Survey (HIES) 2013-14 and 2018-19 to estimate the conditional Engel curves for
eleven expenditure categories using the Quadratic Almost Ideal Demand System
(QUAIDS). Results of the study show a significant difference in the composition of budgetary
expenditures of households during the low tariff period compared to the high tariff
period. An increase in the electricity expenditure leads to a fall in the budget shares devoted
to education, health, housing, water, and fuel (other than electricity). This study reveals
how frequent tariff reforms in the electricity sector burdened the limited household resources
and thus impeded prosperity.
