Power is one of the prime movers of economic development. The level of availability and accessibility of affordable and quality power is also one of the main determinants of the quality of life. In fact, the power sector is often considered to be the pillar of infrastructural growth and economy. The Government has, since Independence, been giving priority to this sector while fixing the Plan outlays. As a result, the installed generation capacity has risen from around 1,300 megawatt (MW) at the time of Independence to more than 1,00,000 MW today. Along with the growth in installed generation capacity, there has also been a phenomenal and required matching increase in the transmission and distribution (T&D) capacity. However, despite these achievements, the power sector has not kept pace with the growth in demand with the result that the country has been facing energy and peaking shortages. The Government of India has recently realized that if the economy has to grow at the rate of 6-7% p.a., the manufacturing sector needs to expand substantially. This is only possible with availability of power which at present is in short supply. Keeping the above in mind, the Govt. has made certain changes which will lead to generation of higher electricity and consequently increase in demand for steel wires.
Although the government has opened up the power sector to both domestic and foreign investors, it has failed to attract meaningful investment. Indeed, many of the foreign power companies that had announced they would invest in India have abandoned their plans. Growth in power generation capacity decelerated to 4.1% in F2001-05 from 4.5% over F1991-F2000 8.5% over F1986-F1990 and 8.8% over F1981-F1985. It is believed that the current operational environment is not conducive to investment by private companies. The most important investment deterrent is the poor financial condition of the SEBs, which are the counter-parties monopolizing the distribution and transmission of power. In addition to the SEBs' poor financial health, complicated clearance requirements impede investment. Moreover, government investment has been slowing over the past few years because of financial constraints. As a result, capacity generation has been severely affected.
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