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India's blackout carries heavy economic and political costs

For the 40 percent of poorer Indians with no electricity access, this week's blackout was nothing new. Economists say power cuts are a reminder of India's need to manage economic growth.

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Anupam Nath/AP
A young Indian girl reads a book by candlelight during a regular load shedding in Mainakhurung on the outskirts of Gauhati, India, Wednesday, Aug. 1.
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Rajesh Kumar Singh/AP
Indian commuters exit an underground metro station where services were fully restored after Tuesday's power outage in New Delhi, India, Wednesday, Aug. 1. Factories and workshops across India were up and running again Wednesday, a day after a major system collapse led to a second day of power outages and the worst blackout in history.

For Rahul Bose, who lives in Khonjonpur, an Indian village of 20 homes set in rice paddy fields, the world鈥檚 biggest power failure had little impact.聽

That鈥檚 because Mr. Bose and his wife, who run a nonprofit literacy project called Suchana, stopped relying on a steady supply of electricity years ago.

In Khonjonpur, 15-hour power cuts are frequent. So, like millions of Indians, Bose relies on expensive, diesel-powered generators when the lights go out. Once the generator鈥檚 four-hour backup is exhausted, he鈥檚 learned to live without.

鈥淭he worst was a 10-day power cut,鈥 he said by telephone. 鈥淥ur local government secondary school, which has 800 students, only got an electricity connection for the first time in May of this year.鈥澛

So it was with some interest that Bose watched as two days of power cuts plunged fully half of India 鈥 600 million people, or twice the population of the United States 鈥 into chaos.聽Suddenly, India鈥檚 urban elite were experiencing the blackouts that are a way of life for millions of rural Indians. And Bose knows he is fortunate. Up to 40 percent of India鈥檚 1.2 billion people are not hooked up to the national grid at all.聽

So far, the exact cause of the simultaneous collapse of three major Indian power grids is unknown. India鈥檚 outgoing power minister, Sushil Kumar Shinde, blamed it on excessive demand.聽Whatever the cause, the two-day blackout has once again put the spotlight on India鈥檚 unreliable infrastructure and the country鈥檚 inability to keep pace with economic growth. Apart from giving India鈥檚 image a black eye, the debacle has increased pressure on Prime Minister Manmohan Singh's government 鈥 criticized for stalled economic reforms and sluggish growth 鈥 to tackle infrastructure problems.

鈥淚f India is to grow at 8 percent, then its energy production has to keep pace,鈥澛燼ccording to Vivek Pandit, director and head of energy policy at the Federation of Indian Chambers of Commerce and Industry (FICCI). 鈥淩ight now there is a double whammy. Indian coal production hasn鈥檛 increased significantly in the past three years and international coal prices have shot up. This blackout was just a preview. Until we reform the coal sector, this situation will be repeated.鈥

Financial losses

And the economic cost is considerable.

There are no exact figures on the financial losses, but it鈥檚 clear that frequent power cuts affect India鈥檚 bottom line.聽

Vikram Kadian runs TravelQShop, a luxury travel agency in Gurgaon, the capital city鈥檚 office park area. Half his employees couldn鈥檛 make it into work on Tuesday and those who did struggled to answer queries as the Internet shut down.聽

鈥淚t certainly has an impact on our image and on our customers鈥 satisfaction,鈥 Mr. Kadian said.

And every blackout 鈥 even the myriad ones that don鈥檛 make the headlines 鈥 raise capital costs. Kadian鈥檚 office fuel bill nearly doubles to $100 per month when power cuts are rife.聽聽聽

鈥淚 traveled the world for several years; and when I started this business last year, everyone was going gaga over India,鈥 he said. 鈥淣ow I鈥檓 sitting here in Gurgaon where half the time there鈥檚 no power and even the roads have not been planned. I think I鈥檇 be better off in Canada. Here I pay 30 percent in tax, but what do I get in return?鈥澛

Power minister promoted

Even as millions of commuters found themselves stranded on trains and doctors struggled to care for patients without essential equipment, Mr. Singh went ahead with a planned cabinet reshuffle that effectively promoted the man under whose watch India hit international headlines for all the wrong reasons.聽

Power Minister Sushil Kumar Shinde moved to the Home Ministry, a much more prominent post, while his old portfolio will now be handled part-time by Moodbidri Veerappa Moily, the current corporate affairs minister.聽

Much needed rain and cooler temperatures may have taken the edge off public anger for now. But fundamental questions remain not just about India鈥檚 infrastructure but the political accountability it needs to manage in a time of rapid growth.聽

But according to Prabir Purkayastha, a New Delhi-based consultant on power issues and an engineer himself, the government has not adequately explained what happened.聽聽

鈥淭he whole northern grid failing twice is an unusual occurrence even for India,鈥 says Mr. Purkayastha. 鈥淟ower temperatures and rain had actually lowered demand for electricity when the grids failed, so it鈥檚 really not clear why this happened. 鈥澛

For Bose, the educator, lack of electricity hinders his efforts to boost the education prospects of some of India鈥檚 poorest, most deprived students. India's ability to raise the standard of living and job prospects of many of its poorer citizens are key factors in determining whether the country finally emerges as a global economic power or remains desperately poor.

鈥淲e help local kids with literacy and numeracy, and we have probably the only computer in the district,鈥 he said.聽聽

鈥淏ut without regular power, kids can鈥檛 study in the evenings. There are no schools to teach science, no labs. You can鈥檛 study engineering or medicine. It鈥檚 like India鈥檚 villages don鈥檛 exist on a map. It鈥檚 very frustrating.鈥澛

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