1 August 2002 – Millions of Indians have been suffering crippling power outages in recent days – sometimes accompanied by water shortages – caused by a combination of alleged corruption in government-run utilities and the common practice of illegally tapping power from overhead lines.

Residents also tamper with electricity meters, and politicians order subsidized or free power for farmers to win votes, pushing utilities to overdraw power and into bankruptcy.

India’s power sector has been at the precipice of disaster for decades, a situation exacerbated in the summer by the scorching heat. Power Minister Suresh Prabhakar Prabhu said losses are currently at $5.4bn, and that about half of all power made is stolen.

The Indian government is trying to pull the power sector back from the brink. Under an ambitious reform program, states are being provided federal subsidies, technical help from the leading Indian Institute of Technology and software industry giant Infosys and trained manpower from federally run power companies.

They intend to cut the sloth, reduce and train employees and improve transmission and billing. Power Secretary R.V. Shahi has pledged that power in 15 key affected states would turn around in three years.

But on Tuesday night, five states in central and western India – areas that are home to 235 million people – were plunged into darkness when the western grid collapsed under excess load. Trains were delayed by hours, water supply was cut off, industries shut down and health services were crippled.

In the town of Purnea, in the eastern state of Bihar, there was no power for 34 days after a transformer blew up. When the local utility declined to repair it, residents pooled their money and bought a new transformer.

Prabhu said the state’s current losses are almost 1.5 per cent of the country’s gross domestic product. “If this business-as-usual attitude continues, the losses will reach 1 trillion rupees ($20.8bn) in seven or eight years,” he told corporate leaders Tuesday at the Confederation of Indian Industry.

The reform programme started with a countrywide survey to assess the state of the power sector. It yielded some open secrets. “We are realizing that there are power stations on paper, which did not exist in reality; transformers which never functioned, and electric meters which never worked,”‘ Prabhu said.

Under the new programme, states will be accountable for their performances on the power front, the quality of power will be monitored, and utilities will be offered money as a reward for better performance. In the next three months, a Reliability Index will be ready in each state capital, and in six months for all district hubs across the country, to highlight slack performance of power stations.

“We’ll put it on TV in the same manner that you get the weather report,” said Shahi, the power secretary. “There must be a psychological burden on the mind of officials, that they are lagging.”