Lack of Affordable and Quality Power Shackling India’s Growth Story

BRIEF in collaboration with Federation of Indian Chambers of Commerce and Industry (FICCI) carried out a study titled Lack of Affordable and Quality Power: Shackling India’s Growth Story to understand the impact of power shortages on the industry of the country. With a total sample of 650 companies, in 20 different sectors, the study was aimed at understanding the current problems faced by these sectors with the intermittent power supply, the measures used to negate this shortage and the solutions both private and public players should be adopting to curb the potentially negative impact.

While there has been some investment and calls for increase in power capacity, a third of Indian citizens, especially in the rural parts of the country remains without power, as does 6% of the urban population. India suffers from an acute shortage of electricity and power, even after being the fourth largest consumer of electricity and power in the world. In India, with a population of 900 million (1.2 billion minus 300 million without power), the per capita consumption stands at 96 KWh in rural areas and 288 KWh in the urban regions.

The burgeoning demand with shortage in supply has resulted in intermittent power cuts across India at a regular basis. There have been two instances of major cuts in the country as well. The January 2nd 2001, power cut resulted in a loss of 2.5 billion rupees to the industry, while the second black out on 30th July 2012, which continued till 31st July 2012, shut down northern industry completely.

While the research data painted a rather grim picture of the current scenario in the power sector, the survey results showed a different view. Where the data may suggest that India Inc may be negatively impacted by the power situation of the country, it was surprising to discover that other than an increase in costs mainly that in fuel, there was minimal impact of power failures and outages on the various businesses. It revealed that the business owners across the country have adapted rather well, by installing back up or captive units, negating the impact on operations, production and various other processes of their enterprises. The original premise that power failures, especially the larger ‘black outs’, had a serious negative impact on the Indian businesses was challenged.