Can making electricity accessible for all improve income inequality situations? Panel data evidence from South Asian countries

• Income inequality determinants in South Asia are evaluated using panel data methods. • More national and rural electricity access initially raise income inequality levels. • More national and rural electricity access later on reduce income inequality levels. • Foreign remittance and urbanization improve income inequality situations. • Financial development and FDI inflows exacerbate income inequality situations. Since high income inequality hinders scope for establishing sustainable futures, this study aims to evaluate how enhancing electricity accessibility may help South Asian countries to reduce their income inequality levels. Notably, although past studies have documented several income inequality-reducing factors in the South Asian context, no conclusive evidence is available on how enhancing electricity accessibility would impact their income inequality situations. Accordingly, data from six South Asian countries is considered for performing empirical analyses, using methods that tackle various panel data-related issues. Overall, findings show that electricity accessibility improvement, both at national and rural levels, initially raises the income Gini index ( exacerbates income inequality situations ) but later on reduces the Gini index ( improves income inequality situations ). Accordingly, the electricity accessibility-income inequality nexus exhibits an ‘ inverse U-shaped ’ association. Therefore, these findings endorse the importance of ensuring electricity for all, especially among rural marginalized communities, in order to enable the selected South Asian countries to thrive socio-economically and environmentally, via income inequality reduction channels, in particular. Besides, it is equally important for these countries to eliminate their urban-rural electricity accessibility gaps to further improve their income inequality situations. Moreover, the findings affirm that financial development and incoming foreign direct investment exacerbate income inequality situations, while foreign remittance receipts and urbanization help to reduce income inequality levels. Furthermore, these findings remain robust even when the Palma ratio of income is considered as an alternative income inequality proxy. Besides, these findings also hold when wealth inequality is taken into consideration instead of income inequality. Hence, based on aforementioned findings, relevant policies are recommended.