Is electricity supply bottoming out?

The improvement in power supply has been led by two industrial states—Maharashra and Gujarat. Maharashra saw electricity supply falling 4.6 percent in December against a fall of nearly 6 percent in November. Gujarat saw a 3.1 percent drop against a 3.1 percent fall in November. Tamil Nadu and Uttar Pradesh saw some deterioration on a monthly basis.

Supply drop in September and August was modest at 1.4 percent and 0.5 percent, respectively, year-on-year.

All India thermal electricity generation fell 4 percent YoY in December 2019. The decline, like in the previous months, was led by state utilities and central utilities. Private power generators continue to do well.

Taken together with other data points such as manufacturing PMI, Coal India’s dispatches, steel price hikes, and better food prices – many would jump to the conclusion that the economy has started bottoming out.

All eyes are focused on Budget 2020 now. News reports suggest that the Budget may announce a Rs 2.86 lakh crore electricity distribution scheme (to be incurred over a few years).

The scheme would aim at infrastructure improvement, pre-paid meters across 250 million households and greater involvement of the private sector in DISCOM functioning. The test of course would be if a scheme like this can revitalise the entire power sector value chain and help in recovery.