Electricity, or rather the lack of it, is one of the biggest constraints on India’s growth. To begin with, connectivity continues to be an issue in rural areas. As of August 2010, more than 90,000 villages (around 15 per cent of the total) remain un-electrified; there are still two years to go for universal rural electrification according to the target set by the Rajiv Gandhi Grameen Vidyutikaran Yojna launched in 2005. Twelve states have 100 per cent rural electrification — Andhra Pradesh, Delhi, Goa, Haryana, Kerala, Punjab, Tamil Nadu, Chandigarh, Dadra & Nagar Haveli, Daman and Diu, Lakshadweep and Puducherry, and in nine states, more than 90 per cent of the villages have been electrified. An outlier is Jharkhand, the only state with less than 50 per cent rural coverage. Currently hit by a multi-crore scam in its rural electrification project, it’s unlikely that this state will get its act together soon. While more than 20,000 villages remain un-electrified in Jharkhand, states with more than 10,000 villages to be covered are Orissa, Bihar, Rajasthan and Uttar Pradesh.
Having a connection, however, is not the end of the story. Urban and rural India reel under power cuts all year round, which are severe particularly during the summer months. Latest data for the period April-August 2010 reveal a deficit of close to 14 per cent of the peak demand; in six states — Jammu and Kashmir, Bihar, Meghalaya, Uttarakhand, Maharashtra and Madhya Pradesh — the deficit of peak demand exceeded 20 per cent. The problems, of course, lie in both generation of sufficient power and the distribution systems. Capacity has lagged demand for long; during the last three plans, barely half of the targeted capacity was installed and with two years to go for the current plan to end, the government has already scaled down its power generation target to 62,000 megawatts (Mw) from 78,700 Mw. Since the 2003 Electricity Act, there have been many reforms opening the sector to private players. Though private sector interest has been high, hurdles remain in the form of land acquisition, red tape, power equipment shortages, the monopoly of Bharat Heavy Electricals Ltd., fuel linkages and so on.
One of the most pressing issues to resolve is high transmission and commercial losses — the average aggregate technical and commercial (AT&C) losses for utilities selling directly to consumers fell marginally from 29.58 per cent in 2007-08 to 28.44 per cent in 2008-09. While the western region was the only one with higher losses in 2008-09, the southern region continued with the lowest AT&C loss, 17.42 per cent in 2008-09. The north-eastern region led with 35.96 per cent losses, followed by the eastern region with 35.51 per cent, the western with 34.32 per cent and the northern with 31.19 per cent. The best performing state was Andhra Pradesh where all utilities incurred losses less than 15 per cent.
State-level performance depends on the strength of the distribution sector and this involves the State Electricity Boards and Regulatory Commissions. In fact, distribution is the critical missing link, as huge transmission and distribution losses discourage the creation of a truly competitive market for electricity in almost all the states. With capacity generation lagging targets and AT&C losses higher than the norm, clearly, power supply will lag demand for many more years.
Indian States Development Scorecard is a weekly feature by Indicus Analytics that focuses on the progress in India and the states across various socio-economic parameters.