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4 June 2008 - India needs to add the equivalent of about half the electricity generating capacity of the UK each year - or about 30 GW - if it is to maintain its present rapid rate of economic growth, a new report shows.
Yet the country in the past decade has managed to build an average of only 4 GW of fresh capacity a year, a fraction of what the study by McKinsey & Co estimates will be required if the economy is to continue to expand at 8 per cent a year.
The consultancy estimates that India will need power generation capacity of up to 440 GW by 2017, or triple its existing capacity, and about one-third more than most projections of what will be required.
"There's been a lot of acceleration of construction of new capacity but this sector is so complex that to achieve your targets, you have to transform the entire way you're doing things," Vipul Tuli, a partner with McKinsey and an author of the report, said.
Power blackouts have become a common feature of life in India as rapid economic growth has led to the development of energy-hungry industries and meant more people are able to afford air conditioners and other appliances.
But the sector is one of the most complex areas of Indian infrastructure to reform, requiring not only regulatory changes but also political will from state and central governments to deal with issues ranging from clearing land for plants to negotiating with foreign countries to secure fuel supplies.
The report estimates that India will require about $600bn in investment over 10 years, or around half of present gross domestic product, much of which will have to come from the private sector.
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