Power theft in India

Power theft in IndiaThe development of power sector of a nation is closely linked to the overall economic growth of the nation. The importance of the power sector can therefore never be underestimated. India being a developing nation has even more to expect from this sector. But it is unfortunate that in spite of all the measures taken by the Central and State governments, the power sector organizations are still facing huge losses. Though people often curse the authorities in their respective areas every time when massive power failure occurs; there is something else also they need to know. The recent grid failure that occurred on July 30 and 31 this year which affected around 600 million people of the country was not solely a result of ineffective administration in the power sector. One important reason was the massive power theft that is so common in this country.

Situation of Power Theft in different states of India

UP is the country’s biggest center of power thefts. The state also has the country’s most inefficient power sector. The state is also blamed for overdrawing electricity from the national grid through illegal means. So it can be concluded that power theft in India is not limited to domestic households; rather industries and States also steal power. On the other hand, the states of Gujarat, West Bengal and Delhi have improvised their power sector through a series of reforms (Denyer, 2012). Haryana government has also taken initiative to control power theft by introducing a scheme called ‘theft informer scheme’ where they reward the power theft informers with cash. The officials who detect the theft are also rewarded under this scheme.

Reasons behind Power Theft in India

Power theft occurs in two main ways: meter frauds i.e. manipulating the electricity usage data and, un-metered usage where the power is enjoyed for free. Political interference is a major reason promoting power theft in India. There are incidences when officials from the state-owned power sector companies are transferred, suspended or sometimes even killed if they try to expose the culprits. Another strange fact which confirms the politics of populism in the sector is that power theft increases during elections. This also shows that political leaders earn votes by allowing electricity theft. Farmers occupy a major chunk of voters in the country and the political leaders often promise them free or subsidized electricity to attract their votes. Moreover, most of the overhead electrical wires in India are still not insulated facilitating illegal hookups. The ineffective law enforcement system in the country regarding power theft further removes the fear among power thieves.

Impact of Power Theft on the Indian economy:

According to the World Bank estimates, power theft reduces India’s GDP by around 1.5% (Smith, 2012). A recent study by NDTV also concluded that 40% of the electricity in India is unpaid (NDTV, 2012). Of all the power generated in the country, around 1/4th is either stolen or lost in transmission. This figure is 5 times the figures for China and one of the reasons why India is not developing at the same pace as China (Denyer, 2012). These data itself show the pathetic situation of power sector in the country. UP has the lowest growth rate across the country which in a way proves that level of electricity losses and the economic growth rate are inversely related.

There is definitely a need for strict regulations against power theft in the country but the situation can never improve unless the people themselves do not stop stealing power. This requires more of a moral awakening rather enforcement of legal penalties.

References

Ankita Agarwal

Analyst at Project Guru
Ankita is working with the editorial board of Project Guru as a Research Analyst and Writer. With Masters in Commerce and Business Studies, Ankita learned much of what she knows about management through experience. She has previously worked in various financial institutions like Birla Global, HDFC Ltd. and Citi Financial. She is self-motivated and writes for the Knowledge Tank section of Project Guru. She has authored more than 80 articles so far in Human Resources Management, Strategic Management, Finance and Marketing. She likes to pen her thoughts about the latest issues gripping these areas across the world.
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