This paper identified the factors influencing the rice crop residue burning decision of the farmers and the potential of the burnt residue to generate electricity. For this study, data were collected from 400 farmers in the rice-wheat cropping system. Effects of different variables on the burning decision of rice residue are investigated through logit model. A number of factors had significant effects on the burning decision of crop residue. These included farming experience of the farmer, Rajput caste, farm size, owner operated farm, owner-cum-tenants operated farm, silty loam soil type, livestock strength, total cost associated with the handling of residue and preparation of wheat field after rice, availability of farm machinery for incorporation, use of residue as feed for animals, use of residue as fuel, intention of the respondent to reduce turnaround time between harvesting of rice and sowing of wheat, convenience in use of farm machinery after burning of residue and the geographic location of farm. The overall quantity of rice straw burnt is estimated to be 1704.91 thousand tonnes in the rice-wheat cropping areas with a potential to generate electric power of 162.51 MW. This power generation from crop residues would be a source of income for the farmers along with generation of additional employment opportunities and economic activities on sustainable basis. In order to minimise the cost of haulage of rice straw, installation of decentralised power plants at village level would be a good option. Further, use of rice crop residue as an energy source can help in reducing foreign exchange requirements for import of furnace oil.