Corruption A Leading Theory Behind India's Blackouts

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India is one of the world's major emerging economies. But last week, an unprecedented blackout cut power to more than half a billion people and exposed serious vulnerabilities in its energy supply system. An investigation is now under way into what caused the massive outage. While the Indian system has no shortage of flaws and inefficiencies, NPR's Julie McCarthy reports that one of its biggest problems comes down to politics.

JULIE MCCARTHY, BYLINE: One leading theory for the record-setting power failure is corruption. Surendra Rao, India's former top electricity regulator, suspects the blackout was the result of powerful states guzzling more than their budgeted share of electricity while regulators looked the other way. He says collusion of that kind takes India's energy grid one step closer to collapse as a sophisticated monitoring system is ignored.

SURENDRA RAO: The Load Despatch Centers must have known on their screens who was consuming too much. They could have disconnected the customer, they could have disconnected the whole state and protect the grid. They didn't do it. Why doesn't he do it? Because his bosses told him not to do it. Who is his boss? The politician and the bureaucrat. This is all politics. Everything here is political.

MCCARTHY: Former Ambassador to the United States Naresh Chandra says powering India is a complex undertaking in a messy democracy. When regulators want to take action against offending states that use more power than allotted them, Chandra says the political leadership is known to intervene.

NARESHA CHANDRA: The chief minister will ring up and say, how do you expect me to cut power to the farmers at this time? It's just not feasible. So there is a lot of give and take. There are always allowances which can be made.

MCCARTHY: Surendra Rao says if political interests continue to take priority over the national interest, India can say goodbye to any further development. An estimated three to 400 million Indians remain outside the national power grid, having no access to electricity.

Charles Ebinger, who directs the Energy Security Initiative at the Brookings Institution, says the state of energy demonstrates that India has a long way to travel before becoming an economic powerhouse.

CHARLES EBINGER: Clearly, no country can have a quarter of its population not electrified and call itself a modern economy. But the problem is, to be fair, they have tried extensively to extend the off-grid power - solar and wind - to a lot of villages. And in certain places like Tamil Nadu, a great deal of success has occurred. But at the aggregate level in the states, it has not been very successful.

MCCARTHY: India's government owns most of the country's energy assets, including its coal, oil and nuclear power. Analysts say these state-owned enterprises are creating economic distortions that hold India back in the long run. Again, economist and former regulator Surendra Rao.

RAO: You know, indiscipline, overstaffing, theft, tariffs that are set on populist basis so our agriculture gets electricity free, some other large water groups get it cheap. We need to cut that umbilical cord.

MCCARTHY: India's state-owned coal industry accounts for nearly 70 percent of the country's power supply. But coal is plagued by a decrepit rail system that delays delivery, forcing power plants to rely on an expensive spot market. The Brookings' Charles Ebinger says a chilly climate for foreign investors prevents India from getting the best technology to extract and explore for oil and gas. He says India is also missing out on strategic energy tie-ups with its neighbors.

EBINGER: You've got gas that, you know, for years has been talked about coming from Bangladesh or from Myanmar. But the Indians, while they dither, the Chinese come and steal the deal in Myanmar. So, I mean, there's all kinds of missed opportunities, which are, at this point, causing the country to have very limited options if it doesn't fundamentally reverse course.

MCCARTHY: When power failed on the Eastern Seaboard of the United States this summer, many customers suffered for up to a week before electricity was restored. Indian engineers fixed the massive shutdown here in a matter of hours. But Naresh Chandra says that is little consolation for expectant Indians troubled by the widening gap between themselves and their economic rival China.

CHANDRA: Indians have started asking: If the Chinese system can do it, what's wrong with the Indian system? So the political leadership is running out of excuses and apologies.

MCCARTHY: Julie McCarthy, NPR News, New Delhi. Transcript provided by NPR, Copyright NPR.