Industrialization, along with technology and resources is a critical application for any fast growing economy and Power is the key ingredient for any economy thriving on industrial development or mechanized processes.
With the formulation of the first five year plan power was identified as key requirement area and adequate importance was provided to power upto the tune of 18-20% of the total Public Sector outlay. In the subsequent plans remarkable growth was observed and support was continued to the power for the development of industries and a boost in economy. Let us have a look at the contours of the Indian Economic Development and the vital role of Power Sector in the post Independence Era:
India and It's Economic Growth can be literally divided into two phases:
1) Post Independence Era, India's Economic growth had been staggering and non-persistent, with a Leninist view on economy, all major and essential produces like Steel, mining, machine tools, telecommunications, insurance, and power plants, among other industries, were effectively nationalised in the mid-1950s. India suffered a major economic blow with the collapse of the Soviet Union and Gulf War (1990-91) which spiked the oil prices. With a slump in the industrial growth and balance of payments India became a debt ridden economy and came on the verge of defaulting it's loans.
2) Post Liberal Reforms period, Under crisp financial crisis India asked International Monetary Fund for a USD 1.8 billion bailout loan. IMF in turn wanted reforms in the Indian markets, finance minister Dr. Manmohan Singh, initiated the economic liberalisation of 1991. The reforms did away with the Licence Raj, reduced tariffs and interest rates and ended many public monopolies, allowing automatic approval of Foreign Direct Investment in many sectors leading towards a free-market economy, with a substantial reduction in state control of the economy and increased financial liberalisation.
Impact of Indian Economy on Power Sector:
During the post independence period, most of the States had established State Electricity Boards rest had electricity departments for the sake of simplicity. Some states even had separate corporations to install and operate generation facilities.
- The National Thermal Power Corporation Ltd. (NTPC) and National Hydro-electric Power Corporation (NHPC).
- North-Eastern Electric Power Corporation (NEEPCO)
- Tehri Hydro Development Corporation (THDC) and Nathpa Jhakri Power Corporation(NJPC)
- National Power Transmission Corporation (NPTC) set up in 1989. The corporation was renamed as POWER GRID in 1992.
Post liberalization and consequent amendments: considerable emphasis has been placed on attracting private investment and the major policy changes have been announced by the Government in this regard,some of them include de-licensing of the Power Generation, promoting private generating companies,up to hundred percent (100%) foreign equity participation permitted for projects set up by foreign private investors in the Indian Electricity Sector, assurance of simplified procedures forclearances of the projects, the policy for Mega power projects was introduced, formation of CTU and STUs to promote private sector participation in Transmission operation and maintenance, formation of CERC and SERCs to keep a watch on the Distribution licensees and consumer welfare.
In addition, the Electricity Act 2003, further opened up the market with the help of open access and licensing for private players in the field of power transmission and distribution.
The Government of India Launched several ambitious projects like proposal of a National Grid, which would change the scenario for inter regional power transmission and will consist of unification of 5 regions (viz. NR, ER, NER, SR, WR).
As the need arose for alternative sources of energy, due to two oil shocks of 1970 and 1990, and the Gas based Dabhol project turned out to be a total fiasco, stress was laid on the promotion of non-conventional sources of energy.
off late, the government has also started to promote research in Smart Grid to keep up with the international trends of automation in the distribution sector.
Presently, the Government of India has a vision of Mission 2012:Power for All, under this scheme, government plans to lighten up every household in the remotest corner of the country. With the following ambitious projects the GoI plans to achieve it's target:
R-APDRP Scheme launched for power distribution sector upgradation and reforms in urban areas.
RGGVY scheme launched to cover up the rural parts of India under the power network including free electricity connection to BPL households.
DRUM scheme launched for upgradation and management of distribution sector for optimal usage and better services.
JNN Solar Mission launched for on grid and off grid power generation to find alternative sources of power on stand alone basis.
Decentralised Distribution and Generation to cover those areas where distribution network could not be provided due to economical or geographical constraints.
Although after making huge investments and providing free connections to the BPL, GoI has made it's presence the rural household, but the target of lighting up every household seems as far cry, since, demand for power already surpasses the supply and most of these projects are still in inception stage or early implementation stage (of the 78,577MW of XIth plan (closed)- 52,365MW is under execution and balance 23,632 MW is still under review). Even if we accelerate the generation projects, we are already facing the shortfall of coal (84% power generation comes from coal) and adding it's production capacity by merely 5 % every year, while, we are adding the installed capacity by 10-15 % every year for thermal generation. So by the year 2020, when India is poised to be the 5th largest economy in the world, we will have thrice the GDP and purchasing power, thrice the installed capacity for power generation and half the the supply of coal required.
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