Where is all the electricity going?

Power production in the previous two quarters grew at 10.74% for September and 8.62% for June

       

Much has been written about the travails of the power sector and power producers seem to be camped outside the Prime Minister’s Office (PMO) in perpetuity to lobby for sops. Yet, power generation seems to be galloping, according to the numbers on the Central Electricity Authority’s (CEA) website. In February, 8% more power was produced than a year ago.

Electricity generation in the December quarter grew 8.84% over a year ago. Now, CEA collects this data from each individual power producing factory. So, one would expect it is reasonable to assume that this data is accurate. But where is all this electricity going?

Electricity generation seems to have no correlation with manufacturing activity in the country. Third-quarter manufacturing activity growth came in at a measly 0.4% from a year ago, according to the Central Statistical Office’s quick estimates of economic growth. Nor is this a single quarter aberration either.

Power production in the previous two quarters grew at 10.74% for September and 8.62% for June. Manufacturing growth in those respective quarters was 2.7% and 7.2%. Does that mean that manufacturing activity was understated? There is little correlation between manufacturing growth and electricity production.

Sure, manufacturing activity accounts for only about 35% of electricity consumption in the country. That is a data from 2007-08, when the last All-India Electric Power Survey was published by the ministry of power. However, that is electricity distributed by utilities. Captive generation and consumption (or off-grid power) data is not captured in these figures. Published data on captive power is hard to come by. Rough estimates of capacity vary between 20,000-30,000 megawatts (that is, between one-sixth and one-fourth of capacity of on-grid utilities). But no one knows what the plant load factors are for these captive plants.

Still, this off-grid power should be reflected in the country’s overall economic growth figures. Leaving aside manufacturing for the moment, there seems to be no correlation between electricity production and gross domestic product figures too. Thus, in the December quarter, the electricity, gas and water supply sub-head showed a growth of 9%, while GDP grew 6.1%. In the first quarter, the respective growth rates were 7.2% and 7.7%. So, does this mean manufacturing and GDP growth have been understated and things aren’t so bad after all?

These anomalies only add to the poor track record of economic data releases in recent times. In the past two years, GDP data has been revised, export growth figures have had to be restated and the Reserve Bank of India grumbles about volatile and inaccurate data in almost every monetary policy review. How can policy decisions be taken on the basis of such inconsistent numbers?