India: Population and Power

In 2010, India was one of the world’s fastest-growing economies. Since 2003, the country had enjoyed annual increases in GDP ranging between 7 and 10 percent. Even in the global economic downturn of 2008, national and international research groups predicted a growth rate of between 6.5 and 7 percent. However, the benefits of this remarkable growth had not been evenly distributed across the populace. While India’s top corporations and financiers had joined the international elite and its middle class has grown significantly, a tremendous number of households operated at barely subsistence level. Harish Hande observed, “India is a paradox in the way you have the rich and the poor; it’s a mix between the over-developed and under-developed.”

One of the major obstacles to further economic development in India was the unreliable access to electricity. In this nation of more than 1.1 billion people, some 404.5 million lacked connection to the grid. According to The World Bank, nearly a third of the country’s businessmen reported that the lack of consistent electrical power was the primary impediment to the growth of their enterprises. Some manufacturers had set up cogeneration projects so that they could ensure consistent supply to their operations. Indian utilities had sponsored a variety of projects to increase the supply of electricity, but the demand kept running ahead of capacity. Furthermore, an inadequate transmission system had led to waste of existing power supplies.

In urban and semi-urban areas, many poor households had no connection to the grid and therefore relied on antiquated technologies like kerosene for lighting. In rural areas where roughly three-quarters of the population lived, only about 35 percent of the households had access to electricity. Even those with a connection to the nation’s power grid found the provision of electricity unreliable. Rolling power cuts and daily blackouts were the norm.

The Indian government had established many programs and policies to expand access to electricity. Under the Electricity Act of 2003, utilities were required to expand power coverage to all parts of India, including rural villages. The National Electrification Policy adopted in 2005 set targets for total village electrification by 2010 and total household electrification by 2012. In March 2005, the Ministry of Power launched its flagship rural program to electrify 100,000 villages and provide free electricity connections to 23.4 million below-the-poverty-line (BPL) households by 2009. Connecting rural areas to the existing central grid proved expensive, costing $41 per person, or almost $17 billion. However, inadequate funding and poor allocation of resources had delayed attainment of the government's ambitious targets. As of the end of August 2009, only 64,331 villages had been electrified and about 6.9 million free connections had been established for BPL households.