India sits atop the world’s fifth-largest proven reserves of coal, enough to satisfy its annual appetite for more than a century. Demand is typically highest in October, and this year several factors have conspired to choke the thermal plants’ access to coal. India’s economy is juddering back to life after two terrible rounds with the pandemic: in the year following the first, caused by the draconian lockdown of April and May 2020, the economy shrank by 7.3%. The nightmarish advent of the Delta variant in April and May 2021 delivered a near-knockout blow. Now, as covid-19 subsides, pent-up demand is surging forth. Consumption jumped by more than 16% from August 2019 to August 2021. Coal India, the national quasi-monopoly, failed to anticipate that (and had anyway skimped on investment in recent years).
Bad weather has made trouble at the same time, as especially late and heavy rainfall in India’s coal belt flooded mines and hobbled transport. Just this week, rains in China’s Shanxi province have compounded that country’s own coal crunch. Which points to a third culprit: prices on the international spot market for coal are at an all-time high. Whereas most of India’s coal supply is domestic, plants on the coast require imported stuff, which the power companies can scarcely afford these days.
Northern India suffered what is ranked as the world’s worst blackout in the summer of 2012. The country’s power supply, like much else, has changed radically since then. The economy had been booming then and power-generation was struggling to keep up. In subsequent years huge amounts were invested in both coal-burning plants and renewable sources of energy (though a substantially greener energy mix remains a long way off). During Mr Modi’s tenure India has been running a surplus of generative capacity. The main struggle lately has been finding ways to connect more Indians to more energy, for the sake of gearing up industry to employ and sustain a population that will soon be the world’s largest. The biggest obstacle has been an outmoded system of finance, which distorts pricing by interposing bankrupt state-run distribution companies between the plants and the end-users. The distributors, unable to command sufficient payment from consumers, go bust and leave generators in turn short-changed and begging governments for bailouts. That is a perennial plague on India’s productivity. In the next five to six months, the urgent need is to keep the economic recovery on track. Liberals like to say that India grows at night, “while the government sleeps”—but it cannot grow during a blackout.
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