Energy poverty, inequality, and institutions: New panel evidence from South Asian countries

Energy poverty remains a critical barrier to sustainable development in South Asia, where nearly two billion people face challenges accessing affordable and, clean energy. While the relationship between income levels and energy poverty is well established, the role of income inequality has received limited empirical attention in this region. This study investigates how income inequality affects energy poverty in six South Asian countries—Bangladesh, Bhutan, India, the Maldives, Pakistan, and Sri Lanka —over the period 2003–2019, while controlling for economic, demographic, and institutional determinants. Researchers construct a comprehensive Energy Poverty Index that captures several dimensions: energy service availability, energy consumption cleanliness, energy management completeness, and affordability. Using panel cointegration techniques and Fully Modified Ordinary Least Squares estimation after confirming the absence of cross-sectional dependence, researchers find that income inequality significantly exacerbates energy poverty independently of average income levels. Inflation similarly increases energy poverty, while economic development, population, foreign direct investment, and democratic accountability reduce it. Notably, stronger corruption control and government efficiency are associated with higher energy poverty, suggesting complex institutional dynamics in developing contexts in which informal mechanisms may currently facilitate energy access. These findings demonstrate that economic growth strategies alone are insufficient for achieving Sustainable Development Goal 7 in South Asia without parallel efforts to address distributional inequities. Policymakers should implement progressive redistribution mechanisms, attract energy-focused foreign investment, and carefully sequence institutional reforms to avoid unintended consequences for energy access among vulnerable populations.