India fact of the day

by on June 1, 2006 at 7:34 am in Data Source | Permalink

a large part of that [Indian fiscal] deficit goes to financing the losses of the electric companies. Two and a half percent of GNP goes into power subsidies [emphasis added]; only half the electricity that’s generated actually gets paid for. Some of the other half goes in unfortunate (we economists think) programs to give free power to the farmers. Unfortunately, the farmers who qualify for free power are the ones who are rich enough to be able to afford power in the first place. But having gotten free power, they let their neighbors tap into it. That’s another portion of the power goes that way. Then there are those who tap the lines. It’s dangerous, but people know how to do it. So half the power doesn’t get paid for even while there’s a big increase in the fiscal deficit, while one has very expensive power for those who do pay, which includes large industry. What do you do if you’re an industrialist with power that costs more to buy than you can generate it for? You buy a generator, which is socially wasteful. A lot of the investment in India is wasted by companies’ generating their own power so as to bypass the power system. So while there have been some attempts at privatizing the power sector and at imposing a regulatory system, there are still big problems at the moment.

Here is the longer article.

vikram June 1, 2006 at 12:52 pm

..and even after private companies take over electricity distribution, they seem unable to punish even small shops that are stealing power frmo the local electricity pole.. due to votebank politics..

..and while we’re on the subject, a common trick to steal power is to simple tie a wire with a bare end, to a stone, and then throw it over a power pole/wire.. it’s called a ‘langar’ in Hindi.

still, we chug along.. :-)

Steve Sailer June 1, 2006 at 4:32 pm

What proportion of the GNP do government units in America spend on providing transportation infrastructure?

paul June 2, 2006 at 11:46 pm

Should India go for Capital Account Convertibility?
What does John Williamson, the father of the Washington Consensus think;
http://truckandbarter.com/mt/archives/2006/06/should_india_go.html

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