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Successive Power Outages Highlight India's Achilles Heel

The power outages that dislocated over half a billion Indians show that India needs modern infrastructure to back up her economic hopes.
By Amiel Ungar
First Publish: 8/1/2012, 4:05 AM

Trainstopping in India
Trainstopping in India
Reuters

Two successive days of massive power failures, the first denying power to 300 million people in India and the second doubling the number of the dislocated, raise questions about Indian pretensions to great power economic status.

Indian Prime Minister Manmohan Singh would like to pump $400 billion into infrastructure, but so far this remains on the wish list Together with India's inferior road system, it has been estimated that infrastructure dampens Indian growth by 1.2% annually.

The results of the power outages were dramatic Trains stopped and disgorged their passengers to fend for themselves; the Delhi Metro managed to get passengers to the next station via battery backup but after that it was everybody off.

Emergency generators were rushed to mines to rescue trapped miners who could not be brought to the surface by electric powered elevators.

As traffic lights failed to operate, chaotic traffic - an Indian given - became that much more chaotic.

It was fortunate that India is used to these power outages so that hospitals and airports kept running thanks to backup generators

While other countries such as the United States have recently encountered massive power outages, this usually came as a result of an abnormal storm. The Indian blackouts are partially the result of the drought that has, on the one hand, decreased supply from hydroelectric sources and on the other hand, led to increased demand because agriculture now consumes more electricity to pump water.

However, even without the drought India's power needs are rising due to industrialization, as well as the rise of a middle class that employs more appliances, consuming more electricity.

The problem is also complicated by the fact that many parts of the grid are run by state governments. It is politically unpopular to raise electricity prices and therefore the states tend to overdraw from the national grid in the expectation that such actions will not bring retribution. As the ruling Congress party relies on allies who are in power in state governments, such expectations are not unjustified, despite threats by the central government to punish states that exceed their quota.

Coal, which powers most of the country's electricity, is a monopoly of Coal India. It pays for that monopoly status by being subject to regulations and therefore must sell the utilities coal at fixed prices, while purchasing the coal at market prices. As in the Soviet system, when prices are artificially low and represent a loss, the result is shortages. This, too, contributed to the power outages and there are calls to dismantle the monopoly.