India warned on lack of electricity By David Gardner in New Delhi Published: September 18 2000 01:12GMT | Last Updated: September 18 2000 01:19GMT

India will miss out on the information technology revolution, despite its world class software industry, unless it massively increases electricity generating capacity, warned Jack Welch, chief executive of General Electric.

Speaking to Indian businessmen in New Delhi at the weekend, the GE chief said: "You don't have a chance to play in the 21st century without lots and lots more power. If you are truly going to digitise you are going to need energy like never before."

Mr Welch's remarks were laden with praise for Indian "intellectual capital" and "the sheer, raw talent" of Indians. But they were clearly intended as a reality check for those Indian bureaucrats and ministers accustomed to describing India as an emerging economic superpower.

The GE chairman said a hand-held computer required more energy than a refrigerator, and that the US, the most developed country in the world, was suffering from serious power shortages. It followed that India - which has nothing like its current electricity needs let alone the capacity "to realise it dreams" - will "miss the next revolution without the power to drive it".

Mr Welch said: "I desperately want this country to win, but you're going to have to free people up and you're going to have to have the infrastructure."

GE has built up a business with turnover of more than $1bn (#700m) in India since New Delhi began tentatively to open up the economy in 1991. It is now established in avionics and medical systems, call centres and investment banking.

India has about 98,000 megawatts of installed power capacity. This is in theory 20 per cent below its needs but a quarter to a third is lost in transmission and through theft. Populist power subsidies to farmers and the urban middle classes have meanwhile bankrupted state electricity boards. Few, in consequence, can guarantee payment to the foreign power companies that flocked to India to build new capacity during the 1990s, many of which are leaving.

The Indian government estimates it needs investment of $250bn in the next decade to double electricity capacity, at least two thirds of it from the private sector. There is little chance of this without user charges that promise commercial returns.

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-- Martin Thompson (mthom1927@aol.com), September 17, 2000