Social Scientist. v 10, no. 113 (Oct 1982) p. 11.

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Government Policy and the Crisis in Power Equipment Industry

THE POWER crisis which afflicts the Indian economy undoubtedly owes its origin to a number of contributory factors. The shortfalls in achieving adequate amount of electrical power have been attributed by K.L. Rao, a former Union Minister for Irrigation and Power, to "inadequate funds, absence of Central authority, improper linkages between the construction materials like steel and cement and the targets set for the completion of power stations, inadequate growth of the fuel sector, as in the case of lignite, multiplicity of organisations dealing with the subject and finally inadequate skills and expertise".1 Among all these factors, however, inadequate investment in the power sector takes the pride of place.

Electric power is a capital intensive business. Shortage of electricity is essentially a shortage of capital. A power station, if it is a thermal plant, has as its backward linkage coal mines, railway infrastructure etc., and, if it is a hydro plant, a dam and the cost of land that is submerged; in both cases the forward linkage is the transmission and distribution system.

The investment in the power sector was Rs. 320 crores in the First Plan (16.3 per cent of the total Plan expenditure), Rs.625 crores in the Second Plan (11.2 per cent of Plan expenditure), Rs. 1,334 crores in the Third Plan (15.6 per cent of Plan expenditure). In the three annual plans taken together Rs. 1,817 crores, or 27.43 per cent of the total plan expenditure, were devoted to power. The corresponding figures for the subsequent plans have been as follows: Fourth Plan, Rs.2,523 crores (16 per cent of the total), Fifth Plan, Rs.7,294 crores (18.6 per cent of the total). In the Sixth Plan it is proposed to spend Rs. 15,750 crores (22.6 per cent of the total) on power* Thus, while in absolute amounts the outlay on the power sector has increased substantially during the various plan periods, in terms of percentage of the total plan expenditure, there has not been any dramatic jump.

*Pres^dent, Federation of BHEL Executives* Associations.

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