Indian power

OECD Observer

Electricity in India: Providing Power for the Millions 

India’s electricity supply industry is mainly owned and operated by the public sector, and is currently running a growing risk of bankruptcy. While India is the third-largest producer of hard coal after China and the US, it imports around 1.4 million barrels of oil per day, 60% of its total needs. According to the US Energy Information Administration, India has a shortfall of roughly 13,000 megawatts of electricity.

Most of the problems of the Indian power sector arise from the present retail pricing system and from the fact that too little of it is actually paid for by the user. Out of total electricity generated, only 55% is billed and 41% is regularly paid for. Electricity is either stolen, not billed, or electricity bills are not paid. This amounts to a mass of implicit subsidy.

Under-pricing is also a problem, as current retail prices of electricity represent less than 75% of real average costs. This has created a serious impediment to investments in the sector at a time when India desperately needs them. Just before its collapse, Enron was the largest American private investor in India. But it gave up on its 65% interest in Dabhol Power Company in Maharashtra after finding it impossible to get paid for power produced.

Looking ahead, India’s crude oil imports are projected to reach 5 million barrels per day in 2020, which is more than 60% of current Saudi Arabian oil production. Energy and electricity will be required for a population that exceeded one billion in 2000 and to fuel an economy that grew at an average annual rate of 7% from 1993-1997.

The difference in this report from others by the IEA is that active government intervention is recommended to help prepare the way for an India-wide free power market. For the moment, no such market exists in India. Only the central government can create the conditions for it to emerge, by inducing the states to reform their bankrupt utilities, encouraging trade among states, and promoting an environment that will attract investment from home and abroad.

©OECD Observer No. 233, August 2002

Economic data

GDP growth: +0.6% Q4 2017 year-on-year
Consumer price inflation: 2.2% Jan 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.5% Jan 2018
Last update: 12 Mar 2018


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Ambassador Aleksander Surdej, Permanent Representative of Poland to the OECD, was a guest on France 24’s English-language show “The Debate”, where he discussed French President Emmanuel Macron’s speech at the World Economic Forum in Davos.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018