Trillionaire economy loses 30,000 crore in 3 months

MUMBAI: Even as India crows about crossing the $1 trillion mark in GDP, here’s a sobering reality: Maharashtra lost Rs 25,000-30,000 crore in the first quarter of 2007 due to load-shedding, according to the Maharashtra Chamber of Commerce, Industry and Agriculture (MCCIA).

“The power cuts have led to a 15-20 percent loss in production. Some industries have shifted production to nearby states like Chattisgarh, Gujarat, and Daman, but their idle machinery incurs a loss which is unaccounted for,” says Anil Gachke, MCCIA vice-president.

The 20% production loss is twice as much as the national average, and is likely to get worse as summer intensifies. Although the Maharashtra State Electricity Board has rationalised the industrial power tariff to Rs 5 per unit, industries in the state are actually having to pay two to three times that rate because of the need to augment the supply with more expensive power.  

As it is, the normal charges are more than twice as high as those in other countries like China, with which the Indian industry has to compete in world markets. But more than the high cost of captive power, it is the production loss due to power cuts that is hurting the industry. The worst hit are small and medium industries.

“Many units in the Thane-Belapur industrial area have moved out their production to Gujarat. New units are also opting for Gujarat or Tamil Nadu,” says Banamali Agarawala, deputy chairman of CII’s western region. Industries in Pune are opting for captive power under a scheme in which the state reimburses a part of the additional cost. Groups of industries are collaborating to generate captive power which they can share. The Thane-Belapur industries, too, want to follow this model, says Dinesh Parikh, president of the industry association there

One region where industries are particularly miffed is Vidarbha, which produces 4,500 MW, or nearly half the power for the state. And yet this is the region where there are power cuts for 12 to 15 hours a day. As a result, industries are being forced to move to Chhattisgarh and Madhya Pradesh. “When we wanted to set up captive power plants, we did not get help from the government. Why then would any industry want to come here?” says Mohan Agarwal, president of Vidarbha Industrial Association.

In fact, the services sector too is hobbling. “We contribute 60 per cent of the state’s GDP, and it is the worst affected region in times of power shortages,” laments CS Deshpande, executive director of the Maharashtra Economic Development Council.

Economists are worried that the industrial growth rate of 11 per cent cannot be sustained without a matching step-up in power supply. “Dabhol is not a magic bullet and we should not depend on it to solve all our problems,” says Ajit Ranade, chief economist of the Aditya Birla Group.