Power and Economic Development - A symbiotic relationship

There is a fine interconnection between availability of power and economic development of the masses of the country. Power leads to industrialization and creates jobs. Industrialization and power leads to automation, improvement in the banking and communication system which further affects the money markets and financial institutions. Funds are generated for further development of the power and other core infrastructure sectors. This is how the entire cycle keeps on moving.

Lack of electricity exacerbates poverty and contributes to its perpetuation, as it precludes most industrial activities and the jobs they create.

Power development is the key to the economic development. The power sector has been receiving adequate priority ever since the process of planned development began in 1950. The Power Sector has been getting 18-20% of the total Public Sector outlay in initial plan periods. Remarkable growth and progress have led to extensive use of electricity in all the sectors of economy in the successive five years plans. Over the years (since 1950) the installed capacity of Power Plants (Utilities) has increased to 89090 MW (31.3.98) from meager 1713 MW in 1950, registering a 52d fold increase in 48 years. Similarly, the electricity generation increased from about 5.1 billion units to 420 Billion units - 82 fold increases. The per capita consumption of electricity in the country also increased from 15 kWh in 1950 to about 338 kWh in 1997-98, which is about 23 times. In the field of Rural Electrification and pump set energization, country has made a tremendous progress. About 85% of the villages have been electrified except far-flung areas in North Eastern states, where it is difficult to extend the grid supply.

India 's electricity supply industry is mainly owned and operated by the public sector, and is currently running a growing risk of bankruptcy. While India is the third-largest producer of hard coal after China and the US , it imports around 1.4 million barrels of oil per day, 60% of its total needs. According to the US Energy Information Administration, India has a shortfall of roughly 13,000 megawatts of electricity.

Most of the problems of the Indian power sector arise from the present retail pricing system and from the fact that too little of it is actually paid for by the user. Out of total electricity generated, only 55% is billed and 41% is regularly paid for. Electricity is either stolen, not billed, or electricity bills are not paid. This amounts to a mass of implicit subsidy.

Just before its collapse, Enron was the largest American private investor in India . But it gave up on its 65% interest in Dabhol Power Company in Maharashtra after finding it impossible to get paid for power produced.

Looking ahead, India 's crude oil imports are projected to reach 5 million barrels per day in 2020, which is more than 60% of current Saudi Arabian oil production. Energy and electricity will be required for a population that exceeded one billion in 2000 and to fuel an economy that grew at an average annual rate of 7% from 1993-1997.

http://www.oecdobserver.org/news/fullstory.php/aid/766/Indian_power.html