India's power minister responds to massive grid collapse

The newly appointed power minister Veerappa Moily said the proper consultation of states and federal government would resolve the ongoing electricity crisis that has left half of India's 1.2 billion people into darkness.

Asia's third-largest economy suffered a peak-hour power deficit of about 10 percent, dragging on economic growth.

More than a dozen states with a population of 670 million people were without power.

Earlier in the day, in a recent cabinet reshuffle, Moily, who is the corporate affairs minister, has been given an additional charge of India's power ministry at the time when the sector is battling a major electricity crisis.

Grids supplying electricity to half of India's 1.2 billion people collapsed on Tuesday, trapping coal miners, stranding train travellers and plunging hospitals into darkness in the second major blackout in as many days.

Stretching from Assam, near China, to the Himalayas and the northwestern deserts of Rajasthan, the outage was the worst to hit India in more than a decade and embarrassed the government, which has failed to build up enough power capacity to meet soaring demand.

While defending his predecessor Sushil Kumar Shinde, Moily said that the former had done a good job during his tenure as the India's power minister.

"It is just like a relay race. Mr. Sushil Kumar Shinde, as a power minister, has done a wonderful job. Maybe that the development that has taken place with the UPA I and II, particularly the power sector is unprecedented, when compared to the previous regimes," he said.

On being asked about the several state governments blaming the federal government over the power crisis, Moily said that there should be proper cooperation between both in such a time to solve it.

"I don't think one can have blame game between the state and the centre, the centre blaming the state or the state blaming the centre, I don't think the problem could be solved on that. I think it has to be done in the proper consultation and collaboration. I think if all the states and the centre join together to resolve the problem with a single mind, it is possible to do it," he said.

The acute shortage of power was severely in Amritsar city of northern Punjab state, where traffic signal lights went off, forcing the traffic police personnel to manually control the heavy traffic for most parts of the day.

India's electricity distribution and transmission is mostly state run, with private companies operating in Delhi, Mumbai and Kolkata. Less than a quarter of generation is private nationwide.

More than half the country's electricity is generated by coal, with hydro power and nuclear also contributing.

Power shortages and a creaky road and rail network have weighed heavily on the country's efforts to industrialise.

Grappling with the slowest economic growth in nine years, the government recently scaled back a target to pump 1 trillion USD into infrastructure over the next five years.

Major industries have their own power plants or diesel generators and are shielded from outages. But the inconsistent supply hits investment and disrupts small businesses.

High consumption of heavily subsidised diesel by farmers and businesses has fuelled a gaping fiscal deficit that the government has vowed to tackle to restore confidence in the economy.

On Tuesday, the central bank cut its economic growth outlook for the fiscal year that ends in March to 6.5 percent, from the 7.3 percent assumption made in April, putting its outlook closer to that of many private economists.