India Is Not Ready for Prime Time

The following article was previously published on Al Fin Energy blog

It is no mystery to most people who follow the news that India suffered two massive power outages last week. But what is less well understood, is that large parts of India's population suffers power outages on a regular basis.

India's power generation infrastructure is woefully undersized and inadequate for the growing customer base. Government regulation of the power industry makes it very difficult for producers to operate profitably. Electricity theft in India is common. And getting anything done in India -- in terms of new infrastructure or power generation -- involves navigating a treacherous obstacle course through the many inevitably corrupt levels of India's governments.

Here is more on the dark reality:

...power failures are a daily occurrence for [most] of the population—or at least the two-thirds of India's 1.2-billion inhabitants who actually have any electricity supply. But they are not for India's elite. For the latter, power guarantees power. The bureaucrats in charge of Delhi's grids switch off the supply to hospitals before they plunge the homes of top politicians into darkness. But this time the lights did go off. And so the residents of the most upmarket parts of the city—so confident of their power supplies that they do not have generators—had to sit in the fetid monsoon temperatures of 35 degrees like everyone else.

The north Indian power failure, possibly the biggest in the history of mankind, affected an estimated 700-million people. It was a global news story. It revealed the parlous state of Indian infrastructure and provided a dramatic example of how public institutions have failed to keep pace with economic growth. And it also revealed quite to what degree the conclusion, so deeply rooted in the West, that India is not only "shining" but will only get progressively shinier, is complacent in the extreme.

...it is increasingly difficult to reconcile the optimism surrounding India with the reality. In a recent book surveying the developing world, analyst and investment banker Ruchir Sharma says that India has, at best, only a 50% chance of becoming what he calls "a break-out nation". A reversal of recent fortunes is also a possibility, he argues. Other countries have suffered decline after a period of rapid growth. But this thought barely appears to have occurred to Western policymakers. Few stop to interrogate the narrative of inevitable, inexorable Indian success. Take, for example, the famous Indian "middle class". If defined in Western terms, as people with salaried jobs, a car, the odd overseas holiday and an apartment or even house, then Indians fitting this category cannot number more than a couple of percent of the population at best. A local definition, given to me by a young man in a cheap restaurant, are those who can afford a cup of coffee. The cappuccino-sippers are infinitesimally few, albeit more numerous every year.

...if other countries can live with a few slow periods, India cannot. Stasis is not an option. Hundreds of millions of young people will be pouring on to the labour market in coming years. They will need to find homes and healthcare as well as jobs. Most have been only partially educated in substandard establishments.

They suffer a grave lack of skills. More than a third will have been malnourished when infants. Horrific gender imbalances due to the pre-or post-natal killing of girls will mean a serious shortage of partners for young males.

Driving through the poor, if improving state of Bihar, on a late summer evening a year ago, the sight in every town I passed through, of large numbers of young men, some evidently drunk, out on the streets in the gathering dusk, brought home quite how easily India's "demographic dividend" could turn out to be the opposite. In worst-case scenarios, the consequence of a combination of tens of millions of people with unrealistically high aspirations, deteriorating prospects of improvement and a consistently mediocre standard of living will be high levels of social unrest. _Mail&Guardian (*irony alert!)

* The "irony alert" refers to the source for this story, South African newspaper Mail & Guardian. South Africa is certainly in no position to lecture India about corruption, a youth population with "a grave lack of skills," or power outages.

Of course the problem of a lack of skills is not unique to the third world or to emerging nations. The grand educational experiment in social justice and equality (government schools and the push for all school children to eventually go to university) for much of the developed world, has helped to eliminate most of the general competencies from the general population.

So even the developed world suffers a shortage of competent workers, while it hires PhDs to drive taxis and to mop floors.

And the power grid and infrastructure that modern green rulers of the developed world yearn for: smart grids powered by big wind and big solar? Such a system would be an eternal nightmare for grid managers and industrial customers -- to say nothing of the average power consumer.

India has a very difficult road ahead. But even the developed world is digging a deep energy hole and competency hole for itself.

The best advice for western voters, come the next local and national elections, may be to pull out the long knives (metaphorically speaking). The privileged political, media, and academic classes may not understand the dire nature of modern decline until they are forced to see many heads roll (metaphorically speaking), over and over again.

More: Details behind India's dramatic grid collapse