What the Power Ministry's Narrative on Energy Deficit Actually Says

Last week, on November 8, the power ministry said that India had a massive peak power deficit of -16.6% in 2007-08. Even in 2011-12, it was -10.6 %, it said.

“Through the multi pronged, comprehensive and aggressive interventions of the government, this deficit is near about wiped out, consistently over the last 3 years,” the ministry has said in a statement.

This was apparently in response to a tweet by the Mahila Congress on India’s power deficit.

But the power ministry’s own figures may well point to several other aspects that do not go well with the story of efficiency the government is claiming for itself.

Electricity demand growth is generally taken to be a real-time indicator of how well the economy is doing. A robust demand growth, availability growth and capacity utilisation of power plants, as well as a high peak power demand growth indicates a booming economy even if the power system was unable to meet the peak demand.

Also read: October’s Power Supply Shortage Was the Worst Since January 2017

So, if the numbers are sliced differently, then the story becomes different, too, and one not-so-favourable to the government.

For the year 2020-2021, the growth in demand or requirement had reversed course and become negative (-1.2%) indicating a contraction in energy demand. Energy generation too contracted (-1.15%) that year. The contraction in the economy is borne out by these figures.

It is quite likely that the deficit became zero that year but has grown this year as the economy started to pick up. 2020-21 was COVID-19 year so it was easy to reduce or make zero the deficit since power needs contracted in a stalled economy.

But what is interesting is the comparison between 2004-05 to 2013-14 and 2014-15 to 2018-19, which is the comparison between the ten years of United Progressive Alliance and the first six years of the Modi government. Average requirement growth during the 10-year UPA period was 6.03% year-on-year and average growth in 'power availability' was 6.34%.

Average growth in power capacity, which measures new power plants starting to generate, over the ten year period was 8.12% and the average plant load factor that shows capacity utilisation of plants was 74.24%.

In the first six years of the Modi government, average demand growth was 4.3% whereas average availability growth was 5.0%. Average capacity increase was 7.2% and average plant load factor was 60.7%. In all the four metrics, power performance was certainly poorer than in the UPA years, likely indicating sluggish economic growth over the six years. It could be argued that power plants take a long time to put up, so too much cannot be read into capacity growth figures. While that may be true, the substantial fall in requirement growth in and of itself indicates poor economic performance.

Taken together, we can infer that the bridging of the power deficit is more to do with poor overall economic performance rather than superior power ministry performance. In capacity growth as well as plant load factor, we don’t see better performance.

Average plant load factor fell by nearly 10 percentage points in the Modi six years compared to UPA’s 10 years, which shows our power plants were not efficiently used in the Modi years.

When demand growth is lukewarm, plants need to be run less.

But what is more intriguing is the figures for 2019-20. The demand growth had dwindled to 1.3% and generation growth too had reduced to 1.3%. India’s first lockdown was ordered only on March 24, which means 2019-20 was not really a COVID-19 year unless the onset of the virus elsewhere was taking a toll on the Indian economy. Or it could be that the economy had already stalled and the nosedive in the following years was not entirely due to COVID-19.

In any case, the power ministry's statement that claims special credit for bridging the deficit in the last three years is a bit dubious since they were also the years when the economy tanked and power demand growth was quite low.

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