Modi needs to reform electricity to power India recovery: Clyde Russell

(Reuters) – Narendra Modi’s crushing election win has given rise to hopes for an economic revival in India, but much will depend on whether he can replicate the electricity success of his home state.

India’s financial markets have been buoyed by Modi’s victory, betting that the Hindu nationalist politician can work the same economic wonders for the whole country that he did while running the western state of Gujarat for 13 years.

The alliance led by Modi’s Bharatiya Janata Party (BJP) won 336 of the 543 seats in India’s lower house of parliament when election results were announced last week, giving India a majority government for the first time in a quarter of a century.

While Modi’s authority will be bolstered by the massive win and his legislative programme will be easier to implement given he doesn’t need to negotiate with coalition partners, the scale of the challenge facing him is enormous.

India is structurally short of electricity, and it’s hard to see how the economy can be ramped up significantly, especially in power-hungry sectors such as manufacturing, without the provision of reliable power at prices high enough to ensure sustainable supply, but not so high as to choke growth.

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