India’s power sector has been underperforming, even after the passage of the landmark Electricity Act (2003) that promised much towards easing the country’s perennial power woes. In the decade from March 2002 and September 2011, installed capacity has increased by merely 77,000 Mw (or 7,700 Mw a year on average).
Growth in electricity generation has been approximately five per cent during the same period. The slow pick-up in electricity generation has expectedly put a damper on economic growth. The overall demand-supply gap increased between 2003-04 and 2008-09, when the Indian economy grew at its fastest pace. The decline in both the overall and the peak shortage in 2010-11 can be ascribed to a combination of the increase in supply and a fall in demand owing to the economic slowdown.
Even as public sector units (central and state) remain the largest contributors to national electric supply, their share in electricity generation has decreased slightly from 90 per cent in 2005-06 to 87 per cent in 2009-10. Concomitantly, the private sector’s share has increased marginally. More to the point, this trend is likely continue, with the private sector expected to contribute about 50 per cent of all new capacity addition during the Twelfth Plan.
Considerable progress has been made in rural electrification. However, the mere extent of electrification says little about the reliability and quality of power. About half of all Indians have no access to electricity, a situation that will be remedied only through a sharp increase in supply coupled with increasing purchasing power, especially in rural India.
The consumption pattern of electricity has remained largely unchanged between 2001-02 and 2008-09. The decline of almost five percentage points in electricity consumption by the agriculture sector corresponds to an increase of 2.7 percentage points by the commercial sector and 3.8 percentage points by industry, suggesting a shift in the structure of the Indian economy. (Click here for the graphs)
