The rural communities, being the most affected, are beyond the reach of the electric grid or cooking fuel distribution network, are thus forced to rely upon crude power sources and their own ingenuity and dedication to provide for their minimal energy needs. In remote rural areas, families are using unhealthy kerosene lamps or candles, at a cost ranging from $3 to $11 per kWh equivalent. These kerosene lamps emit 0.2 lumens per watt of energy, compared to 10 lumens per watt emitted by a 40-watt incandescent bulb that is found in most electrified homes. The same families listen to small radios powered by poor quality, disposable dry cell batteries, costing between $30 and $60/kWh. Television sets, a source of pride as well as a much-needed source of information and entertainment, are often powered by poor-quality car batteries. These batteries are fully discharged and then recharged via various means like tractors or other engines running on diesel along with other fuel resources at a significant time and economic cost ranging between $2.50 and $3.50 per kWh. Cooking is accomplished by using either wood or locally made charcoal. However, except for remote villages, few families use gas systems for cooking-based needs and requirements. Potable water is also scarce in these areas since communities lack energy resources to extract deep ground or spring water and, thus, rely on surface sources that can be easily contaminated.

If comprehensively stated, the proliferating needs and requirements of rural India primarily constitute supply of electricity and educational facilities. Research studies have supported the fact that the decentralised alternative form of energy acts as a sustainable alternative for electrifying most unelectrified villages. It has been estimated that India requires about 100,000 MW capacity of electricity in order to reach its Power for All mission by 2012.

In view of the transformative effect that availability of reliable energy can have on the lives of people, the Government of India (GoI) has prioritised rural energy programmes and has embarked on a massive programme to enhance power generating capacity and promotion of rural electrification with emphasis on connections to households below the poverty line. This thrust of the Government builds upon policy changes made through the Electricity Act 2003 to support production and distribution of electricity on a decentralised basis and focuses on schemes for providing access to electricity in rural India, such as the Rajeev Gandhi Grameen Vidyutikaran Yojna (RGGVY), which aims to cover all rural households by 2012. There is increasing emphasis on the use of renewable sources of energy for power production, particularly in remote locations. GoI intends to promote renewable energy on a larger scale, both from an energy security point of view and as a climate friendly option. The implementation of Rural Electricity Policy (2006) of GoI through promotion of Renewable Energy based Decentralised Generation (REDG) plants provide a unique opportunity for developing and strengthening household electrification in rural areas.

The programme has the following outcome level objectives at both policy and practice level.