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India loses $86 billion annually to power sector distortions- World Bank

New Delhi: What could be the total economic cost imposed by distortions in the power sector on the Indian economy annually? The figure was a staggering $86.1 billion, or roughly 4.13 per cent of the gross domestic product (GDP) in financial year 2015-16, according to the World Bank. 

The economic cost of distortions was one order of magnitude higher than the fiscal cost of subsidies to distribution utilities which was worth $8.8 billion (0.42 per cent of GDP) in 2015-16. The excessive health cost borne by the population and external costs due to excessive emissions of global warming gases are estimated at $35.4 billion a year. 

The report titled “In the Dark: How Much Do Power Sector Distortions Cost South Asia” was released today. It is authored by Fan Zhang, senior economist in the Office of the Chief Economist of the South Asia Region at the World Bank. It focuses on the cost of power outages, inefficiencies of utilities, subsidies, their causes and impact on the South Asian region, including India.