The growth of the economy calls for matching rate of growth in infrastructure facilities The Indian Power Sector is a core component of the Indian infrastructure and its expansion is essential for the success of economic liberalization of India. India, which inherited a little more than 1,300 MW at the time of its independence in 1947, today has an installed generating capacity of around 114,000 MW. The growth rate of demand for power in developing countries is generally higher than that of their GDP. In India, the ratio of demand growth to GDP growth was 3.06 in the first Plan and peaked at 5.11 during third plan and came down to 1.65 in the eighties. At present, a ratio of around 1.5 is projected. Therefore, in order to support a rate of growth of GDP of around 7 % per annum, the rate of growth of power supply needs to be over 10 % annually. This is evident from ever increasing power demand of the country’s vibrant economy leading to a widening gap between the supply and demand. The Government of India has an ambitious mission of ‘POWER FOR ALL BY 2012’. This mission would require that our installed generation capacity should be at least 2, 00,000 MW by 2012 from the present level of 1,14,000 MW.

Generation Sector

Table 1

	Hydro	Thermal	Nuclear	Cumulative Capacity
Central Sector	8742	12790	1300	22832
State Sector	4481	6676	0	11157
Private Sector	1170	5941	0	7121
Overall	14393	25407	1300	41110

Source: Annual Repport 2002-03 , Ministry Of power

In order to mobilise additional resources for the electricity sector, to help bridge the gap in demand and supply, Government formulated a policy in 1991 to encourage greater investment by private enterprises in the power generation sector. Inspite of encouraging response to this energy policy from domestic and foreign developers, the contribution from the IPPs has just been about 3,500MW.

*Capacity addition achieved during last 6 years