Economic growth in India, the world’s second fastest growing major economy, could be crimped by a shortage of power—a sector where the country hasn’t had much success in adding generating capacity, attracting private sector investment, reforming distribution and reducing losses in transmission. On Wednesday, consulting firm McKinsey & Co. released ‘Powering India: The Road to 2017’, a report that encapsulates the state of the sector and the challenges it faces and presents recommendations on how these challenges can be addressed.
The government has tried to increase power generation capacitythrough several initiatives, including a much-hyped ultra mega power project (UMPP) programme, where a government arm sets up a company, acquires land and other clearances, and then transfers ownership to the winning bidder. Several states have also sought to reform the distribution side of the business. However, legal and other issues have resulted in delays the first and political opposition have all but derailed the second. The situation also hasn’t been made easy by the shortage of fuel such as coal and natural gas.
“India’s economic growth will be at risk” if these issues aren’t addressed, says the report.
Challenge and Response (Graphic)