EFFECT OF POWER OUTAGE ON INDIAN ECONOMY
Abrar Ahmad, Hasan azmi Ahraz athar
Department of Electrical Engineering, Jamia Millia Islamia
Abstract power outage in India is norm and
not exception mainly due to demand of power is
proportional to population of the country. The
per capita income (translates prosperity of
nation) which now has catch up the same curve
as the per capita electricity consumption for any
country, it is quite clear that any alleviation in
per capita consumption will affect the per capita
income of the individual and GDP of the nation.
In this paper we have deciphered the link
between these two trends. We conclude that
power outage is directly affecting the GDP of
nation and minimizing the profit from Indian
industries due to backup arrangements.
Keywords- per capita generation, per capita
income,
1. Introduction
Since the industrial revolution, power has become
the most basic element required for any function in
an economy. Each segment of modern society is
dependent heavily on power, from domestic,
agriculture and industrial to service and
governmental operations, all require electricity and
energy to function, without which the world,
regardless of a specific sector, would come to a
standstill and India is no exception to the rule. With
a growing population, especially that in urban
areas, this new industrializing country (NIC) has
increasing demands of electricity and power
production.
The strain on the current production facilities was
recently evident by the failure of the Northern and
Eastern grids, effectively halting two fifths of the
country. These failures put cities such as Delhi on a
standstill, not supplying electricity for almost two
consecutive days. With the innovation of captive
power generation units and power back-ups, the
Indian economy did not shut down completely, but
the affect of such a power failure were felt across
segments and sectors throughout the country, most
notably in the industrial sector
2. Objective and Methodology
We try to Estimate industrial losses due to irregular
power supply per day or scheduled load shedding.
Following are the main considerations we have
taken in order to decipher the link between power
outage and monetary loss.
1. Additional Investments made on back up
supply such as DG sets, inverters, etc.
2. Exploitation of diesel as a fuel on account of
uninterrupted energy source
3. Understand the level of Instability in the
working cycle due to power cuts
4. Impact on profitability due to power cuts
A total 650 sample of surveys have been done the
details of cities and number of sample taken is
detailed in the table 1.
Table 1: City Wise Sample Break-Up
3. Sectors Covered In the Study
It is observed from the above chart that 48 percent
samples (8% each) were selected form Textile &
Apparel, IT Enabled Services, Infrastructure &
Capital Goods, Hotels, Automobiles &
Components and Trading units. Another 35 percent
(5% each) were selected from Telecom &
equipment, Plastic/PVC, Iron & Steel, Hospitals,
Electronics & Equipment, and Ceramics/Glass
sectors. Six percent samples were selected from
Chemical/Petrochemical/ Oil & Gas sector. Three
percent each samples were selected form Pulp &
Paper and Cement industries. Eight percent
samples were selected (2% each) from sectors like
Food & Beverage, Fertilizer, Diamond Processing
and Aluminum industries. About 5 percent samples
were covered from miscellaneous service category.
Some of the sector distribution as per geographical
location is, as it is known to be. For example, IT
enabled services and Infrastructure and capital
goods are located primarily in Karnataka. Textile
and Food and Beverage, two sectors that usually
locate themselves close to populous areas are
predominantly located in Delhi. Heavy industries
that include, Iron and Steel, Aluminum, Cement,
Automobile components etc are located in states
that offer large spaces and lower population
densities like Andhra Pradesh, Gujarat, Karnataka
and Maharashtra. Smaller industries that are
covered under the other service industry category
are predominant in less developed states like Orissa,
a state known to be in recent years, trying to
improve its industrial attraction. Skilled labor
intensive and technology dependant industries like
chemicals, plastic/PVC and diamond processing
seem to prefer Gujarat.
4. CONSUMPTION DETAILS:
Table 3: Monthly Max Demand
The table above gives the average, minimum and
maximum load requirement for all the sectors based
on the scale of the company. It can be seen that in
all the categories of the enterprises, electricity
dependent sectors have the highest load
requirement. In small-scale enterprises, iron and
steel sector has the highest load requirement,
followed by aluminum and ceramics/glass sector.
With regard to the load requirement in medium
scale enterprises, cement industry has the highest
load requirement followed by iron and steel and
aluminum sectors. In the large-scale enterprises,
again cement industry has the largest load
requirement and is closely followed by iron and
steel and ceramics/glass
The monthly consumption of electricity varied with
the size of the firm and the degree to which it was
mechanized and automated. The sector wise average
monthly electricity consumption revealed that about
36 percent of the surveyed firms consume 10001-
50000 KWh monthly. This category consists of
firms from all the sectors but is majorly constituted
by firms from Textile & Apparels, Pulp & Paper,
Plastic/PVC, Trading units & other service industry.
The second largest share (25%) comprises of firms
consuming between 1000001-500000 KWh per
month. Sectors in this category include the above-
mentioned sectors as well as the electricity
dependent sectors like Iron and Steel, Aluminum,
Fertilizer, Infrastructure and capital goods and
others. Consumption range between 50001-100000
KWh falls at 18 percent with units from Cement,
Pulp & Paper and IT enabled services constituting
the major share. 17 percent of the surveyed firms
show an average monthly consumption of less than
10000 KWh. It is noticed that firms from food and
beverage sector contribute to this average monthly
consumption the highest. Only 4 percent show
average monthly consumption of above 500000
KWh. This share comprises of mostly electricity
dependent/intensive sectors such as Iron and Steel,
Aluminum, Ceramics and Glass, Cement and
electronic and equipment with a few Chemical and
automobile sector companies, Hospitals and Hotels.
The state wise analysis shows that majority of the
firms in Andhra Pradesh and Tamil Nadu face
power shortage for more than 30 hours a week
while in Odisha, the majority 21-30 hours per week
with the exception of few, that face shortage of
above 30 hours. This trend, where Andhra Pradesh,
Tamil Nadu and Odisha show the highest impact or
lowest results in various tables is evident across the
study. This implies that the power scenario in these
three states is by far the worst as compared to other
states and thus tends to always show the worst
results. This could be due to many reasons including
issues in connectivity, absence of power grids or
stark difference between demand and supply in
these states. In Maharashtra, Gujarat and Karnataka,
the majority of the companies surveyed face power
shortage of less than 1 hour a week while a few face
1-5 hours per week. In Delhi, the majority face 1-5
hours a week while in West Bengal, Madhya
Pradesh and Jharkhand, the majority face 6- 10
hours per week. In Andhra Pradesh and Tamil Nadu,
the shortage even exceeds beyond 40 hours per
week for few of the firms
From the graph, it can be ascertained that average
cost of electricity in the country can range between
Rs 5.16 to Rs 8.48. Odisha and Delhi show lowest
prices of electricity per unit, while Maharashtra,
Jharkhand and West Bengal are the higher prices in
the range. States like Gujarat, Andhra Pradesh,
Karnataka, Madhya Pradesh and Tamil Nadu show
prices at the median of the range, at around Rs 7 per
unit.
5. Loss details (generators and invertors). 40 percent of the
companies immediately run power back-up options
that are available to them. In many cases, these
systems come online as soon as a power outage
occurs. This helps the companies maintain
productivity levels at the same standard as when
operating with power. Following closely, 28% of
companies shut down the air conditioning units
immediately after any power cuts. It is the belief of
most companies that air conditioners are the
heaviest electricity consuming machines and the
stopping of their operation not only reduces cost in
using power back-ups but allows measures like
inverters to function better and longer. About 20
percent of companies use green-technology sources
Figure: Outage of power per week in different states
for power in case of power cuts. Though the exact
procedure or technology in use is not known, this
The state wise analysis shows that majority of the
increasingly popular measure is both sustainable
firms in Andhra Pradesh and Tamil Nadu face
and helps companies keep costs relatively lower
power shortage for more than 30 hours a week
than when using other power back-up options. The
while in Odisha, the majority 21-30 hours per week
last two measures noticed in the survey were
with the exception of few, that face shortage of
closing down less important operations (10%) and
above 30 hours. This trend, where Andhra Pradesh,
shutting down operations completely (2%),
Tamil Nadu and Odisha show the highest impact or
indicating that these two options are almost last
lowest results in various tables is evident across the
resort options and are rarely used.
study. This implies that the power scenario in these
three states is by far the worst as compared to other
It was observed in the data that the capacity of
states and thus tends to always show the worst
generators falls between the following ranges: Less
results. This could be due to many reasons
than 10 KVA, 10-100 KVA, and 101-500 KVA and
including issues in connectivity, absence of power
above 500 KVA. Of this, most generators being
grids or stark difference between demand and
used fall in the 101-500 KVA category, at 38.83
supply in these states. In Maharashtra, Gujarat and
percent. Small and medium companies use this
Karnataka, the majority of the companies surveyed
capacity category the most as do a few large
face power shortage of less than 1 hour a week
companies. The above 500 KVA capacity
while a few face 1-5 hours per week. In Delhi, the
generators are mainly employed by the larger
majority face 1-5 hours a week while in West
companies and a few by medium sized companies.
Bengal, Madhya Pradesh and Jharkhand, the
Of the total sample, 19.42 percent used generators
majority face 6- 10 hours per week. In Andhra
with this capacity. Large companies rarely use
Pradesh and Tamil Nadu, the shortage even exceeds
generators with capacity between 10-100 KVA. Out
beyond 40 hours per week for few of the firms.
of the 34.95 percent of companies that use this
capacity category most tend to be medium
An important factor in understanding the
enterprise, followed closely by small firms. Last,
preparedness of companies in regards to power
only a few medium sized companies employ
outage is the awareness they have on scheduled
generators with less than 10 KVA power
power cuts or load shedding in their area. The
generations. The primary users of this category are
survey revealed 54% of companies were aware in
small companies and only 6.8 percent of the total
advance of the load-shedding schedule. This
frame was observed to employ these generators as
constituted companies from Odisha, Andhra
power back-ups.
Pradesh, Tamil Nadu, Karnataka and Maharashtra.
The sector wise analysis showed the level of
Companies in states like Delhi NCR, Gujarat,
dependence of the various sectors on generator sets
Jharkhand, West Bengal and Madhya Pradesh did
to ensure continuous production activities. The
not have any information about their Discoms load
capacity of the generators held by firms depended
shedding schedule.
upon the scale of the firms, degree to which their
operations were energy intensive and the The sector
7.1 Mitigating facilities and Backup measures
wise analysis showed the level of dependence of
the various sectors on generator sets to ensure
While there are various methods available to
continuous production activities. The capacity of
manage times of power outages, the survey
the generators held by firms depended upon the
revealed a few key steps that are taken by
scale of the firms, degree to which their operations
companies as measures to manage operations
were energy intensive and the well, where power
during power cuts. The most significant step as
cuts are not so frequent. This could be due to the
observed is immediately running power backups
presence of electricity dependent sectors like
Plastic/PVC, Ceramics/ Glass etc., which are some
of the top consumers of this capacity generator,
apart from other electricity dependent sectors like
Iron and Steel, Fertilizer and Cement. The
generators with capacity less than 10 KVA were
found the most in Karnataka, may be due to the less
frequent power cuts experienced by the state or the
presence of some less electricity intensive sectors.
The major users of this category generator in the
sample were trading and food and beverage units.
The remaining capacity ranges, 10-100 KVA and
101-500 KVA, were held by firms from almost
every state and sector.
Table 3: state wise distribution of generators
hour was by firms operating in sectors that are
known to be energy dependant like cement, iron
and steel and aluminum (and known to be large
companies) and situated in states where power
outages are frequent. In some states where the
electricity supply is relatively better, the
consumption is much lower. For example, a large
number of small and medium enterprises
(especially textile and apparel) are situated in Delhi
(NCR), which is known to have a steady supply of
electricity and thus the firms show a small
consumption of fuel. Other sectors like IT enabled
services in Karnataka, food processing in
Maharashtra and trading units in Gujarat, all small
or medium industries, located in states with little
power shortages, support this analysis.

7.2 Average Fuel Consumption

The distribution of average fuel consumption by

litre per hour shows the efficiency of the power
back-up generators or facilities that are available. It
shows that smaller companies majorly employ
generators that consume less than 10 liters of fuel
per hour. The distribution of average fuel
consumption based on the capacity of generator
shows that the generators consuming less than 10 6. COST ESCALATION
litres per hour are primarily those with capacity in
the lower range of the 10-100 KVA capacity range,
It was observed that because of power outage there
with few being in the less than 10 KVA categories.
was cost escalation because firms had to invest in
Consumption of more than 100 litres per hour,
backups like generators, invertors etc. The most
which forms 19 percent of the total sample, is
important of these cost came because of the
predominantly constituted by large companies and
investment made on generators, fuel they consume,
is consumed by generators with capacity above 500
storage of the fuel, their running charges
KVA. The other consumption categories of 10-25
maintenance cost etc.
litres and 51-100 litres per hour of fuel were
predominantly constituted by medium companies
Calculation
and made up 23 percent and 18 percent of the total
studied companies.
Fuel used = no. of outage hour x no. of generator
The remaining 15 percent consumed 26-50 litres
and majorly comprised of small companies.
Fuel cost=cost of fuel x Average fuel consume
Generators with capacity 101-500 KVA were found
to consume 26-100 litres fuel per hour and 10-25
litres per hour were consumed by generators with
Case of Andhra Pradesh
capacity between 10-100 KVA and in the lower
Samples=75
range of 101-500 KVA. While the reasons for these
Outage per week=30hrs
numbers may vary, the reasons as understood by
Outage per year=30*52=1560hrs
the study reveals that the higher consumption of
Types of gen.
fuel is a result of longer hours of operation and
10-100 kva:14.29%of 75=10.78
nothing else. The consumption of 100 litres per
100-500kva:52.38%of75=39.29
More than 500kva:33.3%of75=24.9
Total fuel per hour
=10.78*30+39.29*60+24.97*100
=5178.3 lt/hr
Total fuel per year=5178.3*1560
=8077680
Fuel cost=8077680*60Rs
=Rs 484660800
=Rs 48.4Cr
Case of Maharastra
Samples=100
Outage per week=2hrs
Outage per year=2*52=104hrs
Types of gen.
Less than 10kva:1.67%of100=1.67
10-100 kva:85%of 100=85
100-500kva:6.67%of100=6.67
More than 500kva:6.67%of100=6.67
Total fuel per hour
=1.67*10+85*30+6.67*60+6.67*100
=3633.9 lt/hr
Total fuel per year=3633.9*104
=377925.6
Fuel cost=377925.6*60Rs
=Rs 22675536
=Rs 2.26Cr
Case of Delhi-NCR
Samples=100
Outage per week=3hrs
Outage per year=3*52=156hrs
Types of gen.
Less than 10kva:4%of100=4
10-100 kva:55%of 100=55
100-500kva:38%of100=38
More than 500kva:3%of100=3
Total fuel per hour
=4*10+55*30+38*60+3*100
=4270 lt/hr
Total fuel per year=4270*156
=666120
Fuel cost=666120*60Rs
=Rs 3996720
=Rs 3.99Cr
Case of West Bengal
Samples=75
Outage per week=8hrs
Outage per year=8*52=416hrs
Types of gen.
10-100 kva:1.96%of 75=1.47
100-500kva:98.04%of75=73.53
Total fuel per hour
=1.47*30+73.53*60
=4455 lt/hr
Total fuel per year=4455*416
=1853280
Fuel cost=185320*60Rs
=Rs 111196800
=Rs 11.11 Cr
Case of Gujrat
Samples=75
Outage per week=2hrs
Outage per year=2*52=104hrs
Types of gen.
Less than 10kva:23.81%of75=17.86
10-100 kva:33.3%of 75=24.9
100-500kva:38.10%of75=28.57
More than 500kva:4.76%of75=3.57
Total fuel per hour
=17.86*10+24.9*30+28.5*60+3.57*100
=2997.1 lt/hr
Total fuel per year=2997.1*104
=311698.4
Fuel cost=311698.4*60Rs
=Rs 18701904
=Rs 1.87Cr
Case of Madhya Pradesh
Samples=25
Outage per week=8hrs
Outage per year=8*52=416hrs
Types of gen.
100-500kva:100%of25=25
Total fuel per hour
=25*60
=1500
Total fuel per year=1500*416
=624000
Fuel cost=62400*60Rs
=Rs 37440000
=Rs 3.7Cr
Case of Karnataka
Samples=75
Outage per week=2hrs
Outage per year=2*52=104hrs
Types of gen.
Less than 10kva:65.38%of75=49.03
10-100 kva:34.62%of 75=25.96
Total fuel per hour
=49.03*10+25.96*30
=1262.1 lt/hr
Total fuel per year=1262.1*104
=131258
Fuel cost=131258*60Rs
=Rs 7875504
=Rs .78 Cr
1}Since no. of registered companies in Andhra
Pradesh is 1,62,218.
Hence net outage effect=48.4cr/75 *1,62,218
=1,04,684 Cr
2}No. of registered companies in maharastra is
2,83,588.
Hence net outage effect=2.26/100*283588
 =6409 Cr

3}No. of registered companies in Delhi-NCR is Through the study it is evident that the current
1,90,456. power scenario of India is shackling Indias growth
Hence net outage effect=3.99Cr/100*190456 story. The lack of affordable and quality power is
=7599 Cr impeding the potential that the Indian industry can
achieve. The study revealed a number of key issues
4}No. of registered companies in Gujrat is with the current state of power. First, the installed
2,61,760 capacity in the country is clearly lacking. The
demand outweighs the supply and thus the
Hence net outage effect=1.87Cr/75*2,61,760 countrys industry as well as its general society is
=6256 Cr riddled by frequent power shortages.

References
5}No. of registered companies in Madhya
Pradesh [1]. http://www.ficci.com_Sedocument_20218_Po
1,08,866. wer-Report2013
Hence net outage effect=3.7/25*1,08,866
=16,112 Cr [2]. http://www.iea.org/statistics

6}No. of registered companies in Karnatka [3]. Sulivan P. 1997. Costs to Industrial and
is2,11,225 Commercial Consumers of Electricity IEEE
transactions on industry applications VOL.
Hence net outage effect=.78/75*2,11,225 33,No. 6
=2196 Cr
[4]. Ghajar R.1996. Nature of residential customer
7}No. of registered companies in West Bengal is outage cost. IEEE Transactions on Power
3,52,122 Systems, Vol. 11, No. 3.
Hence net outage effect=11.11/75*3,52,122
=52,161 Cr

To generalize these outage effect for all states in

india ,We have calculated the ratio of net outage
effect on each states divided by their respective
nominal gross domestic product(GDP).
We get
STATES Net outage/GDP
Delhi-NCR .03779
Gujrat .0093
karnatka .00428
Andhra pradesh .139
West bengal .0841
Maharastra .00463
Madhya pradesh .04329

Taking average of net outage/GDP ratio of seven

states and multiplying it to GDP of all states of
India ,then we will have approximate effect of
outage on India.

And,it comes out to be equal to be 4,32,411 Cr

Conclusion

Based on the above calculation ,we found that

monetary loss on Indian economy is 4,32,411 Cr
per year. This loss is very huge and it is about 4.8%
of indian GDP.