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Causes of Power Crisis in India


In this article we will discuss about the causes of power crisis in India and its critical evaluation.

India is facing a serious power crisis in recent years. Although power development was significant during the last four decades of planning but the generation of power proves insufficient in comparison to its requirement. Thus the country is facing a persistent power crisis, since last few years.

During April-December 1993, the gap between requirement and availability of power was 7.6 per cent compared to 8.5 per cent in the corresponding period of last year and the peaking shortage was 14.7 per cent. During 1994-95, the overall all-India power shortage was 7.1 per cent.


Region wise, East has a shortage of 12.9 per cent, followed by the North-East with 9.6 per cent shortage, South 8.0 per cent shortage, North 7.3 per cent shortage and West experienced a shortage of 3.9 per cent. Thus the country’s power situation is grim despite the growth in generation, because demand has far outstripped production.

The Power Ministry’s annual report for 1996-97 revealed that the power supply falls short of the total demand by 16.9 per cent. The peak demand calculated was 62,367 MW whereas 11,852 MW of power was supplied. There has been a marginal reduction in the transmission and distribution losses.

In 1996-97, there was a loss of nearly 21.13 per cent, which is slightly less than that recorded last year (21.41 per cent). In recent years, the country’s power situation still remains grim. In 2006- 07, the peak demand of power calculated was 1,00,715 MW against which 86,818 MW of power was supplied resulting peak deficit of 13,897 MW of power which was 13.8 per cent of the total demand.

Main factors which are responsible for this persistent power crisis in India are as follows:


1. Increasing Demand:

Demand for electricity has been increasing continuously in India. During the 1980s and 1990s, this increase in demand was at the annual rate of 9 to 10 per cent. Increase in the demand for Electricity has been increasing from all fronts, i.e., from agriculture, industries, domestic for chronic shortage of electricity in the country.

2. Poor Plant Load Factors (PLF):

The plant load factors (PLF) reflects the operational efficiency of power projects in conditions of excess demand. In India the PLF is very poor. PLF of the projects under the SEBs of Bihar, Assam, West Bengal and Orissa are ranging between 25 to 40 per cent. PLF of SEBs in general remained all along very low.


The overall PLF of 65.09 per cent in Thermal plants achieved in 2013-14 can be substantially improved. Thus inadequate attention is paid to improve the PLF of the power projects of the country. This leads to a severe power crisis in the country. Thus poor utilisation of plant capacity is an important factor responsible for continuous power crisis in the country.

Even 1 per cent improvement in PLF makes available an additional 450 MW of power. Thus improvement in PLF will increase power supply as well as generate more financial resources for SEBs.

3. Gaps between Targets and Achievements:

Another factor responsible for power crisis is the continuous gap between the targets and achievements of power generation. This shortfall in targets of power generation which was 15 per cent during the first Plan had increased 50 per cent during the Fourth Plan and remained 28 per cent during the Sixth Plan.

Again at the end of Seventh Plan, the generation of electricity in India reached the level of 245.4 billion kWh, as against the plan target of 295 billion kWh, leaving a shortfall of about 50 billion KWh in realising plan targets.

Moreover, during first four years of the Eighth Plan, capacity addition has been 14,799 MW as against the Eighth Plan target of 30,858 MW, showing the realisation of target by 48 per cent only and a shortfall in target realisation by 52 per cent.

The Economic Survey, 1996-97 has identified some reasons behind such shortfall and accordingly observed, “Several reasons have been identified for slippages in capacity creation in the Central and State sector. These include poverty of funds, delay in placement of order for main plant and equipment, delay in supply of equipment by suppliers, procedural delays in land acquisition, non-resolution of inter-state disputes, problems due to disturbed site conditions at some of the projects, unresolved issues in fuel linkages, suspension of work due to contract failures and resettlement and rehabilitation problems. Another important reason for slippages, particularly in state sector projects has been that the states saw the announcement of policy for private participation as an opportunity to cut back on their involvement in generation projects. As a result, many projects, that were scheduled for commissioning through the state sector resources have not been provided adequate funds for timely competition.”

4. Other Factors:

Other factors which are responsible for persistent power shortage in the country include:


(a) Use of obsolete machinery,

(b) Huge transmission loss to the extent of 20 per cent,

(c) Irregular supply of coal and supply of inferior quality coal to thermal power plants,

(d) Labour indiscipline and lack of proper administration,


(e) Lack of efficient engineers, technicians and skilled labour,

(f) Unfavourable hydel-thermal mix and

(g) Public sector’s monopoly control over the generation of electricity.

On the whole, the power shortage had been primarily due to severe resource constraints and the adoption of half-hearted attempt in the areas like maximisation of generation from the existing plant, energy conservation, reduction in transmission and distribution losses and timely completion of on-going power projects.


Unless the basic malady of poor financial performance of the boards is tackled, it may not be possible to improve the power supply situation of the country. Rationalisation of tariff, therefore, needs immediate attention and political compulsions should not be allowed to cloud this issue.

The Standing Committee on Power has blamed the Government for the dismal power scenario in the country and said its failure to take corrective measures and its expectations of the private sector participation were responsible for the present situation.

On the policy of private sector participation in power sector, the Committee observed that while the number of proposals received from private entrepreneurs had been considerable, their materialization and implementation had not been so.

Eight fast track power projects had not made the expected headway and thus the Committee stressed on the need for expeditious action and for formulation of a “sound integrated and transparent policy.” These policies should be able to inspire public confidence and also tackle effectively the various difficulties that arose from time to time.

Another peculiar trend observed in the power scenario of the country is that the hydel power generation has been going down. The Committee on public undertakings in its report of NHPC observed that one of the major factors responsible for the decline in share of hydro power in the total power generation of the country has been the “Causal approach of the Government towards exploitation of hydro potential in the country and lack of any long term policy in this regard.”

An action plan has been drawn up to improve the performance of the power sector in a phased manner. This involves short term, medium term and long term measures and covers both the physical and financial aspects of generation, transmission and distribution of power. Short term measures include overhaul and maintenance (O & M) of boilers and optional operation of the regional grids.


Significant improvements in the PLF of the thermal power stations can be effected through medium term measures like proper maintenance of planning. In the long term, the availability factor of the older thermal-power plants can be improved by appropriate renovation and modernisation (R & M) programmes.

However, the deficit in power supply in terms of peak availability and total energy availability rose continuously from 2003-04 to 2007-08, a period characterized by high growth in peak demand and total energy requirement. Despite modest growth in electricity generation, the peak deficit came down considerably in 2008-09 on account of slow-down in the growth of peak demand.

During April to December, 2009, the peak and total energy deficits came down considerably to 12.6 per cent and 9.8 per cent respectively from 13.8 per cent and 10.9 per cent during the corresponding period in the previous year. This happened mainly on account of the increase in the growth of electricity generation.

Restoration of the financial health of SEBs and improvement in their operational performance continue to remain the most crucial issues in the power sector. Thus considering the present power crisis faced by a country like India, having a huge and growing size of population, immediate steps must be taken to restore the physical as well as the financial health of the existing power projects both under the centre and the states.

Moreover, the Government must formulate a “sound integrated and transparent policy” for the early completion of the ongoing power projects under the private sector which is expected to provide necessary support to the power sector to meet the on going power crisis faced by the country.

Besides, the other areas like improvement of plant load factor (PLF), reduction of transmission and distribution losses, proper maintenance of the existing projects, introduction of renovation and modernisation programmes, rationalisation of tariff structure and utilisation of untapped hydel capacity must be given adequate recognition and care.

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