The cost of short sight in policymaking can be substantive for an economy on an aggressive growth path. More so, when it comes to powering the wave of economic activity that promises to take the entire country along in its wake. This cost is visible in the fact that the target for electricity generation in India will fall short by no less than 60%, five years from now. Why?
Private investment in power generation has been limited, for which a key reason is that of every rupee worth of power sold, only around 60% can be realized. This is due to a culmination of policy bottlenecks and populist tendencies. Though the private sector is now more upbeat about reforms, the generation business is facing a big constraint in buying equipment at home for new power plants. Again, why?
There has been an implicit preference thrust on the power-generating PSU majors in favour of the state-owned Bhel Ltd. This was one of the factors that discouraged private investment in the equipment industry.