Business

Can’t Even Keep the Lights On: India & Her Supposed ‘Global Power’ Status

[The following is a cross post that originally appeared on CNBC]

Cant Even Keep the Lights On: India & Her Supposed Global Power StatusFirst it was corruption of staggering proportions, then an ill-conceived tax to claw back capital gains from foreign companies; that was followed by slowing growth and a swooning rupee. Now a power blackout in India has left 700 million people without electricity.

India has fallen a long way from 2009 when Hillary Clinton, on a visit to New Delhi, declared unequivocally
that “India is not just a regional power, but
a global power.”

[Related: Massive India Blackout Leaves 300 Million Without Power]

India’s policymakers have been fixated with pursuing major strategic ambitions with the hopes of one day becoming a superpower. The country has tripled its defense expenditure over the last decade to become one of the top-ten military spenders. It has been lobbying for a permanent seat on the United Nations Security Council and it has been trying to raise its profile globally through public diplomacy and events such as the Commonwealth Games.

In 2010, the London School of Economics argued in a report that despite India’s impressive rise, the country shouldn’t get carried away and pursue global ambitions, rather it should focus on solving its deep socio-economic problems.

“The bright lights of great power diplomacy may serve only to distract from the pressing requirements of India’s domestic development, which to date has neither locked in its successes nor laid out a sustainable path for the future,” the report said.

[Related: China's Lower PMI Reading Masks 'Notable Rebound']

Yet, the government has failed to pursue economic reforms and has flip-flopped on key policies such as letting foreign supermarket chains enter the country. That has hurt sentiment among foreign investors, who for many years were willing to fund India’s large trade deficit.

As a result, India’s benchmark Sensex Index has fallen nearly 18 percent from its peak in November 2010, and over the past year the rupee has slumped 25 percent against the dollar. Growth slowed to 5.3 percent in the January to March quarter, the slowest pace in nine years and a far cry from the 9 percent growth rates in recent years.

Creaking Infrastructure

India’s government says the country needs $1 trillion in infrastructure investments by 2017 to fix the dismal state of its roads, ports and power supplies. The government was hoping the private sector would provide most of this funding, but the head of India’s Planning Commission admitted just this month that the country won’t be able to meet the $1 trillion target.

Cant Even Keep the Lights On: India & Her Supposed Global Power Status[Related: Greeks Can No Longer Afford Paying Expensive Bribes]

India’s power sector problems have also been well documented. Several major private firms which began building large power plants in recent years have been forced to abandon or delay them because of government-set electricity rates that no longer make sense in the face of higher fuel costs.

Reliance Power, for example, has decided to delay a $3.2 billion coal-fired project in the southern state of Andhra Pradesh. Unless India’s government steps in and raises the rates these power companies can charge, the power crisis is likely to worsen.

The growth outlook has darkened so much that Ruchir Sharma, the head of emerging markets at Morgan Stanley and the author of a new book called Breakout Nations, sees only a 50 percent possibility of India regaining its fast growth trajectory.

[Related: India’s Power Crisis Puts Global Ambitions on Back Foot]

India’s Prime Minister seemed to recognize the urgency when he took over the finance minister’s post last month and assured investors he would pursue reforms.

But Taimur Baig, chief economist at Deutsche Bank told CNBC earlier this month: “the rhetoric needs to be followed with concrete actions expeditiously as investors are unlikely to give policy makers a prolonged period of benefit of doubt.”

Without those urgent reforms, India may finally have to turn the lights off on its lofty ambitions of superpower status.

Deepanshu Bagchee, ©2012 CNBC.com, all photo courtesy AP

Follow Becket Adams (@BecketAdams) on Twitter

Comments (65)

1 2
  • cableguy03
    Posted on August 2, 2012 at 5:44am

    What struck me was the picture for the article. its the demorcRATic party. One guy doing all the work ( TAX PAYER ) every one else getting a free ride ( WELFARE ).

    its the
    d
    e

    Report Post » cableguy03  
    • Stoic one
      Posted on August 2, 2012 at 7:00am

      historyguy48
      Direct quote 2008: :”Under my plan, electric rates will necessarily skyrocket.”

      Report Post » Stoic one  
    • MittensKittens
      Posted on August 2, 2012 at 10:53am

      So, because Billary says so it is? Right, India’s still a 3rd world country, with pockets (at best) of signs of becoming a modern country…give me a break!

      Report Post » MittensKittens  
    • rickc34
      Posted on August 2, 2012 at 11:44am

      The world is looking for someone with all the answers to come onto the world stage, someone that all we fall in love with and the world with follow with blind devotion, someone that can solve the energy and economic woes of the world, Bible believing Christians will not be here if you believe in a pre tribulation rapture of the Church. This man will deceive many and the world will marvel after him and believe everything he says. Think it cannot happen ? Many follow a man right now with blind devotion and cannot see the faults of him, This man will require that the world worship him as God and will require they accept his mark which will cause them to loose any hope of going to Heaven, this man will be the anti-christ and he is real. Read your Bible, get involved in church, seek and you will find salvation, do not look to man look to God who loves you.

      Report Post »  
  • Nervous Investor
    Posted on August 2, 2012 at 5:26am

    Very stupid thrust for an article. TheBlaze needs to be less jingoistic and more real in its reporting. Whatever the difficulties faced by India presently they are rising from being an extremely impoverished nation with a population that dwarves that of the USA spread over a vast area and which WILL be the counter balance to China (and probably Islam) in the decades and century ahead. As if the USA does not have its own black outs, “hurricane” panics and other (often exaggerated) dramas from time to time. India has the largest English speaking population in the world – perhaps in decades to come, Indian accented English may become the lingua franca of the world.

    Report Post »  
    • yougottabekidding
      Posted on August 2, 2012 at 6:09am

      What part of the story is bashing India? Seems to me it’s pretty straight forward.
      Yes we occasionally have blackouts some lasting for several days affecting several thousand, but I do not remember that we had any where 700 million people were without power for days.But what does that have to do with anything?
      It does show that the large government being the nanny state over a class system does not do well and usually makes the wrong decision in the name of power. These people have nuclear weapons and can not provide basic service.

      Report Post »  
    • NEAF
      Posted on August 2, 2012 at 6:21am

      You are a drone. When we have blackouts is because of natural disasters. India have blackout because of government disaster. But don’t worry, soon we are going to get our own blackout cortesy of the regime.

      Report Post » NEAF  
    • historyguy48
      Posted on August 2, 2012 at 6:49am

      Like India America is literally poised to begin having major electric supply problems only, unlike India, it isn’t because of a lack of capacity (although we could use far more) but a direct result of Dear Leaders policies.
      A large precentage of America’s coal fired generating plants will be shutting down permanently over the next year because of new government REGULATIONS! In Ohio alone this will mean that we will lose 32 plants.
      What this article is really doing is showing us our near future. Only India is keeping their rates to low while our rates will “necessisarily skyrocket!) Dear Leaders quote.

      Report Post » historyguy48  
    • Stoic one
      Posted on August 2, 2012 at 6:58am

      1,200 million population; 700 million no electricity. It does not matter what the cause is…..this is economically devastating.

      Report Post » Stoic one  
    • marybethelizabeth
      Posted on August 2, 2012 at 8:09am

      So then you all agree with President Obama that business success can only come if it rests on the work of others.

      And you agree with Elizabeth Warren that our infrastructure investments should increase.

      Report Post » marybethelizabeth  
    • barber2
      Posted on August 2, 2012 at 8:36am

      Mary: No.

      Report Post »  
    • Zipit
      Posted on August 2, 2012 at 8:45am

      No MaryBeth! No one with the ability to express a cogent thought would agree with Obama! However, any success or accomplishment that the government can lay claim to, was due to the hard work and success of those who built their businesses and payed the taxes!

      Secondly, we could increase our infrastructure investment (and should) by not wasting what money we do have on worthless social programs for you and your ilk! Borrowing forty cents on the dollar to fix a few potholes in your neighborhood shows the insanity of the world you live in. Nice try though!

      Report Post »  
    • Mil Mom
      Posted on August 2, 2012 at 1:23pm

      @marybethelizabeth
      Posted on August 2, 2012 at 8:09am

      So then you all agree with President Obama that business success can only come if it rests on the work of others.

      And you agree with Elizabeth Warren that our infrastructure investments should increase
      ***
      Who pays the taxes that build those roads and bridges? (Hint: “It ain’t Lil Timmy Geithner, or any of the other appointees who had to hurridly pay owed taxes to be confirmed!”)
      Second, Government doesnt’ need to build infrastructure, just QUIT DESTROYING THE FREEDOM OF THE PRIVATE SECTOR TO DO SO! ….AND DON’T FORCE THE CLOSURE OF 150 POWER STATIONS ACROSS THE COUNTRY LEST THE NEXT STORY USE THE NAME AMERICA INSTEAD OF INDIA WITH THIS SUBJECT !!!!

      Report Post » Mil Mom  
  • kegbuna
    Posted on August 2, 2012 at 3:04am

    And the blaze had to go and make the title even worse. Why are we even bashing India so badly as it is struggling to come up. I think it’s just because Clinton once said that India was doing well, so the cool thing is now bash its people to pieces. Pretty shameful..

    Report Post » kegbuna  
    • Apple Bite
      Posted on August 2, 2012 at 3:18am

      I don’t think that was the intent here. I think the intent was to show that in order to gain power, you need a solid foundation from within. Without that, everything falls apart from beneath you. India‘s gov’t is built like a house of cards

      Report Post » Apple Bite  
  • Verceofreason
    Posted on August 2, 2012 at 1:23am

    As this has already happened here, what’s your point?
    Bashing other people and countries doesn’t make us superior.
    Another FOX tool.

    Report Post » Verceofreason  
    • D-Fence
      Posted on August 2, 2012 at 8:00am

      Government set rate which have created this mess. Another fine mess central planning without considering market effects into the mix. Awe, I guess we’ll just have to create forced labor camps so the political elite can fulfill on their utopia.

      Report Post » D-Fence  
    • barber2
      Posted on August 2, 2012 at 8:38am

      So you agree that Obama should not be bashing the “ rich” who already pay the majority of the taxes paid ?

      Report Post »  
  • Bonnieblue2A
    Posted on August 2, 2012 at 12:56am

    Rather than criticize India perhaps we should take a hard look at the shortcomings of our own electrical grid and actually do something about it. Those who think Obama‘s policies forcing the shutdowns of coal fired power plants won’t lead to blackouts are fooling themselves. What if our grid faces a nefarious attack? This nation and the people whose lives depend on electricity are NOT prepared. http://www.empactamerica.org/

    Report Post »  
  • gb123
    Posted on August 2, 2012 at 12:35am

    I have worked in India. The power shortages have been around for a long time. Some Industrial areas had a daily timed shutdowns of electricity. Most major distribution and manufacturing locations tend to have their own back up generators. The infrastructure just isn’t there to cope with the population.

    Report Post »  
  • conservativedesi
    Posted on August 2, 2012 at 12:34am

    My bad.. not criticising the posters here.. just the snideness of the person who wrote the cNBC article. Interestingly enough someone of Indian heritage, whose parents maybe got away from India. One more liberal with no understanding of the real world.

    Report Post »  
  • psadie
    Posted on August 2, 2012 at 12:30am

    Hillary Clinton is a fool who will say anything to boost a third world country. India isn’t as great as you think. They have growth but they don’t know how to handle it they are all over the board. They have no direction because they don’t have the experience and knowledge.

    Report Post »  
    • Eleutheria
      Posted on August 2, 2012 at 1:13am

      I‘ve never met anyone from India who wasn’t as liberal as the day is long.

      Report Post » Eleutheria  
  • conservativedesi
    Posted on August 2, 2012 at 12:30am

    Wow. What a snide article. Just because India still has poor people, isn’t it entitled to spend money on defense to protect itself from China and Pakistan? And surely 1/10 th of humanity deserves a seat at the Security Council? I grew up in India, and it’s amazing how much admiration Indians have for Americans and how they strive to be like Americans. A bit harsh to treat one of America’s true friends this way. You wouldn‘t treat a friend any worse because he’s poor, then why doesnt’ India deserve respect? It didnt murder millions like the Germans or need help from others to fight its wars like the French or lose its culture to muslims like the British.

    Have a little kindness towards the millions of kids who still study by candelight, for the hundreds of millions of people struggling through summer, without riots, without fighting. How does that compare to Katrina again??

    Report Post »  
    • rsanchez1
      Posted on August 2, 2012 at 12:34am

      If you don’t speak frankly to your friend about his deficits that made him poor, you are no friend.

      The US has done more than enough to prop up India economically. But when someone in the US is candid enough to point out the weaknesses in India’s economic policy, that becomes unacceptable? Take our money, but not our advice?

      Report Post »  
  • rsanchez1
    Posted on August 2, 2012 at 12:26am

    Government policy that fakes explosive growth can only result in explosive failure. It’s a historical fact.

    The Democrats forced banks to make money cheap to people who had no hope of paying for a house otherwise. The economy grew with all this easy money flooding the market. When everyone realized that the economy was standing on a house of cards, the gust that collapsed it quickly knocked everyone down. Houses were foreclosed left and right. Jobs were lost everywhere. Yet because the government still wants to fake growth, they call it a “recession recovery”, when it is only surpassed by the Great Depression in how destructive it was to the economy.

    The situation is repeating itself in India. They are faking growth by artificially setting the price on utilities. The great blackout was an inevitable result.

    Here’s something to ponder, is India’s explosive population growth a result of women being denied contraceptives, or is it a result of India‘s government pulling the wool over people’s eyes, making them believe they can afford a growing population?

    Report Post »  
  • Triplescrew
    Posted on August 2, 2012 at 12:26am

    My friend is Indian and he said the only thing holding them back is their leadership. If they ever get their politics in order, they’d rival and surpass China within decades.

    http://www.gainsense.com/2012/08/the-valerie-jarrett-debacle.html

    Report Post »  
  • JohnLarson
    Posted on August 2, 2012 at 12:15am

    I do web development and Indians are EVERYWHERE. They work hard. A lot of them are amassing wealth and their middle class is growing.

    Infrastructure problems aside, they are going to be a huge player in the Internet Age.

    Report Post »  
    • barber2
      Posted on August 2, 2012 at 12:26am

      Blah. Blah. Blah. Like India so much ? Fine. Why don’t you go live there ? All of you Lefties should relocate and leave the capitalism and the infrastructure here to us Americans who are actually proud of our country and the people who made it successful ? Take your anger. Take your anti-Americanism and move it. Or shove it. Whatever floats your boat. So tired of your juvenile, dysfunctional , brainwashed rants.

      Report Post »  
    • JohnLarson
      Posted on August 2, 2012 at 12:32am

      America has a mixed economy with many socialist programs.

      Why don’t you move to libertarian Somalia? No big government.

      Report Post »  
  • The-Monk
    Posted on August 2, 2012 at 12:14am

    700 million without electricity? That’s over twice the population of the USA. : (

    Report Post » The-Monk  
  • Rajabear1
    Posted on August 2, 2012 at 12:11am

    Praying for India and her people during this trying time. I can’t even imagine what it would be like…the whole country…yet if we had an EMP attack, it absolutely could be us. Scary…

    Report Post »  
  • marcus_arealius
    Posted on August 2, 2012 at 12:09am

    Remember this is the country where the US has outsourced much of it’s software coding and development. A country where 50% of the population craps in the open. As I’ve said for years now, you pay me $85-90 an hour to get the job done right in 40 hours or you pay India $20 an hour for 500 hours and the damn thing still has show stopping bugs. Have a nice day outsourcers!!

    Report Post »  
  • Tankertony
    Posted on August 2, 2012 at 12:01am

    Visited India back in 98′. The people were nice, the food was great, a very interesting place. But I left for home a few days early. And when I got back to America the first thing I did was kiss the ground.

    Only parts of Europe can even compare to the infrastructure that we have here. Most of the World is third world with parts that try to be second world.

    After traveling the World, one is humbled by the power and majesty of human freedom. Especially, how it has manifested itself in our great nation. Thus my disgust with ‘progressives’ and the godless left. They’d take it in a heartbeat if they could.

    When you see the popular tire cover with the flag and the saying ‘There’s only one.’ You better believe it!

    Report Post » Tankertony  
  • ballsofFe
    Posted on August 1, 2012 at 11:57pm

    I live in a Money-magazine top rated town that has a burgeoning Indian immigrant population. Like most Americans, they like the clean schools, clean roads and everything about our upwardly mobile American society. Yet I can’t help but wonder if we’d have the society we do, with things like trash collection, working infrastructure and generous public libraries, if it was up to those cheap bastards. Just say’n…

    Report Post » ballsofFe  
  • Ron_WA
    Posted on August 1, 2012 at 11:53pm

    Despite a power grid which is only a bit more vulnerable & antiquated than ours don’t sell India short …

    India has got quite a bit that we need to keep an eye on: – 4 times our population; – it pumps out highly educated STEM graduates at a rate far exceeding ours (STEM: Science, Technology, Engineering, Math [we used to dominantly lead the world in this]); they have the 3rd largest military to include a pretty decent navy; they have ICBMs; most importantly they have a fair # of nukes.

    They are non presently a peer-competitor but like China they are ascending & could be a peer-competitor by 2040 if they stay on pace …

    Report Post » Ron_WA  
  • Dougral Supports Israel
    Posted on August 1, 2012 at 11:43pm

    I would not be so quick to mock India’s power grid. We don’t know how robust ours is. All we need is a big sunstorm or God forbid an EMP attack to find our own weakness.

    Report Post »  
    • BryanB
      Posted on August 2, 2012 at 12:23am

      @Dougral Supports Israel

      U.S. Power Grid and Power Plants have hade EMP Shielding since the 1950′s..

      I just thought you would like know that………

      Report Post » BryanB  
    • Stoic one
      Posted on August 2, 2012 at 7:13am

      BryanB
      It’s just every consumer electric item that is at risk…..

      Report Post » Stoic one  
    • BryanB
      Posted on August 2, 2012 at 4:11pm

      @Stoic one

      Go and buy some Chain-Link Fencing, and you to will have EMP Shielding…….

      Report Post » BryanB  
  • Al J Zira
    Posted on August 1, 2012 at 11:32pm

    If Obama does what he‘s inclined to do and declares energy resources as part of the state or federal resource we’ll be in the same boat.

    Report Post » Al J Zira  
  • Cavallo
    Posted on August 1, 2012 at 11:26pm

    Price caps cause shortages… why is it that none of these people ever seem to learn this despite it being proved over and over and over again?

    Report Post » Cavallo  
    • jimabates
      Posted on August 1, 2012 at 11:33pm

      funny isnt it ?? this is probally why I am not getting any annoying telemarketing calls from india in the few past days . huh go figure!! maybe there computers dumped my number. lol

      Report Post »  
    • rsanchez1
      Posted on August 2, 2012 at 12:31am

      Because promising low utility prices is an easy way to get elected, and schools everywhere suck at teaching economic history.

      Report Post »  
  • KangarooJack
    Posted on August 1, 2012 at 11:23pm

    I am NOT going to throw any stones! How many of you remember when the power grid went down in the Midwest. Didn’t we blame Canada or something?

    I remember it VERY well. Was Manager of an Assisted Living Home at the time. A 4 story home! Ah, Seniors don’t DO stairs too well.

    The United States is but 2 weeks away from anarchy without juice. Not ALL of the United States…just those idiots who expect ‘da gov’t to take care of them….think of Katrina and you’ll get the picture.

    Report Post » KangarooJack  
    • Cavallo
      Posted on August 1, 2012 at 11:32pm

      .. or the huge blackout in the northeast? When the lights of NY went out? All sorts of panicking on how terrorists can easily destroy us all by taking out a few key substations and the like? India has a bureaucracy problem, and in some ways is still trying to centrally control things the way they have been since independance.

      Report Post » Cavallo  
  • aplingtjayonia
    Posted on August 1, 2012 at 11:20pm

    Apparantly, India hasn’t been following the model of sustainability as set forth in the U.N.’s agenda 21. Shame on you India. Oh, and I’m not certain, but I think that maybe, somewhere in microscopic fine print in agenda 21, there may be a provision to fund a revival of the thuggee cult in India. So, all you want to be thuggees, buy yourselves some hankees cause this may be your big break. Seriously, if you do not know about agenda 21, research it, it’s true. I’ve known about it for about 3 years now, but have been afraid of ridicule to say anything about it to co-workers and friends about it. It’s bad stuff. Our leaders are deeply in bed with the U.N.. Agenda 21 is subtile, vile, and the terminology used to impliment it is a devilish play on our goodness and our desire to to what is best. It’s being implemented into as many small communities in the U.S. as they can get their tenticles around. Please educate yourselves. I also hope India can get their power grid up to speed too.

    Report Post » aplingtjayonia  
  • Stoic one
    Posted on August 1, 2012 at 11:10pm

    Will these politicians be rational?

    Oh, wait they are politicians…what was I talking about..
    Rational politician – oxymoron.

    Report Post » Stoic one  
  • Darmok and Jalad at Tanagra
    Posted on August 1, 2012 at 11:01pm

    Hey, I just called “Peggy” to straighten out my credit card statement. She couldn’t help me, the computers were down, the lights were out, but the squishy machines mysteriously work and the beef jerky doesn’t spoil…..ever.

    Report Post » Darmok and Jalad at Tanagra  
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