1. 2. Analyze the Indian power sector based on the information given in the case
Ans
 India’s growth depended substantially on the availability of reliable electric power,
although power generation was growing at 10% per annum.
 India’s power generating capacity grew from 1,360 MW to 81,000MW in 1995. 71% was
in thermal, 26% was in hydroelectric, and 3% was in nuclear.
 The central government owned and operate at about 31% of the capacity under NTPC,
while other 65% is operated by state operations and rest 4% is contributed by private
sector
 Per capita consumption of electricity In India is was 190 kwh2 in 1995 but later it got
increased, hence shortage of electricity
 These shortages were spread unevenly across the country, 17% in south, 5% in west,
hence such shortages continue to restrict development as industry and transport
accounted for 70% of India’s power consumption
 The SEB were unable to meet the shortages in the power sector because most of the were
close to insolvency
 Also the cost recovery was above 100% only in two states i.e Maharashtra and
Karnataka, while average cost recovery from other states were 78% these huge losses
were because of subsidies electricity to the rural areas
 In Agricultural sector, which accounted for 29% of total electricity sales by all the
utilities taken together, contributed only 4.7% of the total revenue by these utilities. Only
two SEB’s yielded positive rate of returns i.e Orissa and Maharashtra
 Transmission and distribution losses averaging 22% of generated power attributed to old
equipment, too few substations, poor quality cables, and widespread theft