The Power Problem in India

Summary

This Forum of Free Enterprise booklet gathers two lectures on India’s power problem, presented in two numbered parts: Part I by A. S. Joshi, a former Technical Member of the Maharashtra State Electricity Board (based on a lecture delivered under FFE auspices in Bombay on 8th August 1979), and Part II by M. S. Padmanabhan. In the rendered pages, only Part I (Joshi) is present; Part II falls in the unrendered portion of the booklet. The volume’s argumentative center is a critical appraisal of how India has planned and managed its electric-power sector since independence, and what structural reforms are needed to close the chronic gap between target and achievement.

Essays

The Power Problem in India — I

By A. S. Joshi

A. S. Joshi opens by granting that India’s power achievements over 30 years are ‘quite impressive’ given a very low 1950s base — installed capacity rose roughly 16 times, from 1,700 MW in 1950 to about 26,000 MW by 1978-79, and generation grew 20-fold. But the bulk of his lecture is a diagnosis of why the sector chronically underperforms its plans. In the rendered pages he documents, plan by plan, large shortfalls between anticipated and actual capacity additions (reaching about 50% in the Fourth Plan), and attributes them to non-sequential and delayed deliveries of plant, poor equipment quality, the near-monopoly of BHEL in manufacturing, cumbersome tender and sanctioning procedures, weak penalties for contractor default, and the distortions introduced by routing power planning through rigid five-year-plan cycles. He is critical of how rural electrification, while beneficial, has hurt the Electricity Boards’ finances and service quality through rising transmission losses in low-density areas.

Joshi closes Part I with a ‘Whither Indian Economy?’ section warning of structural retrogression tied to the decline of planning, followed by a numbered list of drastic remedies: giving the power sector the highest national priority (above defence); establishing a Central Electricity Generating Board with executive authority backed by Regional Boards, leaving State Boards to transmission and distribution; delinking power planning from the five-year-plan cycle onto a continuous rolling basis; fixing minimum annual capacity additions; instituting a national dialogue on the proper hydro-thermal-nuclear mix; accelerating hydel schemes by settling inter-state river-water disputes; and establishing additional manufacturing capacity in competition with BHEL.

• Installed capacity rose ~16x (1,700 MW in 1950 to ~26,000 MW by 1978-79) and generation ~20x, an impressive base given low 1950s starting point.
• Table 1 documents plan-by-plan shortfalls between anticipated and actual capacity, reaching ~50% in the Fourth Plan (1969-74).
• Causes include non-sequential and delayed plant deliveries, poor equipment quality, and BHEL’s near-monopoly ‘know-all’ approach to manufacturing.
• Cumbersome tender/sanction procedures and weak default penalties delay projects; Joshi favours completion bonuses over penalties.
• Rural electrification has hurt Electricity Boards’ finances and service quality via rising transmission losses in low-density areas.
• Joshi calls for power to be given highest national priority, above defence.
• He proposes a Central Electricity Generating Board with executive authority, with State Boards confined to transmission and distribution.
• He urges delinking power planning from the five-year-plan cycle onto a continuous rolling basis and competition in equipment manufacturing.

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