A nation without power

New Delhi: Prime Minister Manmohan Singh has warned that India’s economy, which has grown by an average 8.5 per cent in the last four years, faces a severe power crisis.

Singh on Monday said that India faces an average power shortage of around 10 per cent and a peak-level shortfall of over 13 per cent, which was as high as 25 per cent in some states.

In a strong message to chief ministers, Singh warned that India has to improve power generation by 2012 or face disaster. “I feel the time has come when we need to take a close, hard look at the process of project execution in the power sector. In fact, time is running out and unless we are able to arrest the growing shortages, the effect on our economy may well prove disastrous,” he said.

Is the power crisis the biggest impediment to India’s economic dream? Face The Nation asked a panel comprising Suresh Prabhu, Shiv Sena MP and a former Union power minister, Lalit Jalan, CEO of power company BSES, and Ashok Desai, an economist and columnist with The Telegraph.

Lost in transmission

Of the total power produced, 30-45 per cent is lost during transmission and distribution in many states. The panel agreed that such a huge loss discourages private investment in the power sector.

“The power sector’s problems are well known and the solutions well defined. What we really need an implementation. We are unable to increase capacity simple because the power sector is not commercially viable,” said Prabhu.

“When you lose electricity that you generate to so called transmission distribution loses, then you really can’t do business in power sector,” he said.

But is the crisis really so severe that it threatens the economy? “The answer is unequivocal yes. There are no prices for guessing this answer right. Without power we cannot think of any growth,” said Jalan.

Desai said power must take priority with the government, as it is needed for agriculture and industry. “You can import agricultural products but not electricity. You have got to generate that electricity here,” Desai said.

Jalan warned that without power all growth would stop. “There is no doubt that power is one of the most major impediment to growth of our Indian economy. Whether it is a services sector whether it is BPO, KPO or industry power is one of the most essential infrastructure.”

“Without power we will have none of these. Now lets us look at some hard numbers. India has a combined capacity of 140,000 mega watts today. With an 8 per cent GDP growth we need a 12 per cent growth in our capacity addition,” he said.

Delhi’s energy deficit ranges from anywhere between 10 to 15 per cent while in Jammu and Kashmir there is power shortage of more than 15 per cent. In Haryana and Punjab power shortages are between 25-35 per cent, in UP 20 per cent, West Bengal 20 per cent, Madhya Pradesh 26 per cent, Gujarat 13 per cent, Maharashtra 20 per cent Karnataka 15 to 20 per cent.

Is the government to be blamed?

Has the Central government created the power crisis by its subsidies and free-power schemes for farmers?

Desai rejected this theory. ”Not the government of India but the governments of the states. Because the state electricity boards are own by the states. But certainly this is part of the problem. The major problem is cross subsidies. Farmers get electricity almost free but domestic consumers get it cheap. Industrial consumers pay the most for power,” he said.

The PM has offered to fund the states to improve power generation, but why has the private sector not shown interest in the power sector?

“No I don’t think it’s not correct. If you look at one of the most successful experiments of power sector reform it was the privatization of distribution in Delhi. Look at the experience of Delhi. In Delhi in the last five years the theft has come down from 55 per cent to bellow 30 per cent. So there is a reduction of 25 per cent in five years, which is 5 per cent every year. This compares to less than one per cent that the rest of the public sector has been able to deliver in rest of the country, ” Jalan said.

Prabhu said private investment alone won’t be enough. “We need private sector investment for obvious reason is one the public sector in investment is not going to come to the extend that we require. But a real problem is that since 1991 we withdrew public investment from power sector to reduce our fiscal deficit. Today we need private investment to supplement public investment,” he said.

Final results of SMS poll:

Is lack of power the biggest impediment to India’s economic dream?

Final verdict:

Yes: 51 per cent

No: 49 per cent.

Source- IBN Live

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SUMIT KUMAR

Executive at India Electron Exchange

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