Why are there so many power cuts in India? Large amount of electricity produced is simply wasted

By: |
February 27, 2020 5:19 PM

In Nagaland, 62 per cent of the electricity produced is lost and only the remaining reaches the common households.

electricity generation, at & c loss, power ministry, capacity utilisationThe AT&C losses are a combination of energy loss that includes technical loss, theft, inefficiency in the collection, and default in payment. (Bloomberg image)

Even as India hardly produces enough energy to fulfil its domestic demand, a major portion of the electricity produced is being wasted. Nearly 20 per cent of the electricity is lost due to technical and commercial reasons (AT&C Losses), according to the Ministry of Power. Such losses are much more in certain states. In Nagaland, 62 per cent of the electricity produced is lost and only the remaining reaches the common households. In Jammu & Kashmir, such losses are nearly half of the electricity produced while in Jharkhand, it is 37 per cent.

The AT&C losses are a combination of energy loss that includes technical loss, theft, inefficiency in the collection, and default in payment. This provides a realistic picture of the loss situation in the context it is measured. The low capacity utilisation in the manufacturing sector, coupled with the AT&C losses have forced people to live with the fewer supply of electricity. 

Capacity utilisation in the manufacturing sector, measured by the Reserve Bank’s order books, inventory and capacity utilisation survey fell to 69.1 per cent in Q2 from 73.6 per cent in Q1, according to the February bulletin of RBI

Also Read: Doubling farmers’ income: Are we already there yet? Farm income shoots up this much in ten years

Sectoral development

Going by the RBI’s industry-wise distribution of projects sanctioned by banks, the share of the power sector in the overall infrastructure has significantly fallen in the last four years. In FY16, the share of projects related to power sector in the overall infrastructure was 57.1 per cent, which fell to 45.4 per cent in FY17; 36.5 per cent in FY18; and 25.1 per cent in FY19.  Adding to worse, amid the ongoing slowdown, the growth in bank credit in this sector has contracted by 1.2 per cent in the financial year so far. 

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