India's power grid needs investment

PUBLISHED : Monday, 06 August, 2012, 12:00am
UPDATED : Wednesday, 15 August, 2012, 11:03pm


Electricity is the driver of any nation's industrial growth, but Indian politicians have not recognised its importance. Vested interests and an unwillingness to rectify supply threats have led to a crumbling of the power grid. It is a reality evident in the recent blackouts that left 600 million people, almost half the population, in the dark. Billions of dollars of productivity was lost as life ground to a standstill. The time has come for the problems to be confronted through the far-reaching reforms that have been shied away from.

There is nothing simple about putting in place what needs to be done, especially in a country as vast in size, population and needs as India. It has the necessary components for electricity generation - the world's fifth-largest deposits of coal and plenty of capital - but they are not guarantees with so inefficient, corrupt and disjointed a system. Beyond the drought currently plaguing the country's north and central regions, reliable supplies are at the mercy of a labyrinth of government ministries, unco-operative states, politicians, regulators, courts, tycoons, environmentalists and criminals. Fast-developing economies often face the same challenge of an inadequate grid, although they usually have fewer obstacles to staying switched on.

The national transmission network sorely needs modernisation and investment. Coal mining is in the hands of a state monopoly, Coal India, which is not digging up enough of the fuel. Power providers, many near bankruptcy in part due to artificially low tariffs put in place by vote-hungry politicians, cannot afford more expensive imports. Red tape, activists, painfully slow courts and the weather are in the way of more power stations and alternatives to coal.

Putting the hum back in power lines requires vast changes, from giving regulators more teeth to privatising coal mining and distribution. Politicians have so far rejected such ideas. But if India's slowing economy is to be rejuvenated, they have to put the country first and opt for reforms.