The goal of the project is to study the extent to which the market design of India’s system of electricity tariffs, which are ostensibly designed to subsidize the rates paid by India’s poor, actually results in India’s poorest citizens paying higher electricity costs and increases the prevalence of slums. In many states in India, the current tariffs for electricity are set below supply costs for certain users, with total subsidies in the range of $25 billion in 2019. The costs of subsidies are then recovered by other users paying costs higher than the cost of supplying them electricity. The system, however, creates perverse incentives for utilities. The project aims to understand the resulting behavior and the distributional effects of this system.