Vikas Bajaj has an interesting piece on the inefficient system of rules that govern power generation in India:
Bajaj argues that the dysfunctional policies have taken a toll on growth:
One of the manufacturers interviewed in the story said that his company:
Price controls limit the production of coal as well as cleaner-burning natural gas. Bajaj notes that the price controls leave private firms facing weak incentives to exploit India’s ample natural gas reserves. Meanwhile, firms and households make due with what’s available. Manufacturers rely on diesel-powered backup generators, an expensive and relatively dirty way to make up for the shortfalls. Households who lack access to electricity continue to rely on traditional fuels for cooking and heating—a practice with substantial health consequences.
Hat tip: Marginal Revolution