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Another BRIC Hits the Wall

India’s frail infrastructure is taking a toll on its economy as farming, mining and manufacturing have sputtered, driving growth forecasts down to their lowest level in 10 years. India’s GDP is expected to grow only 5 percent this fiscal year, well below earlier government projections. The FT reports:

“The number is astonishingly low,” said Naina Lal Kidwal, president of the Federation of Indian Chambers of Commerce and Industry. […]

Independent economists and analysts have long been more pessimistic than the Indian government about growth and inflation, partly because electricity shortages have left factories unable to meet demand.

Clearly, India has a power problem. Last summer’s blackouts were the largest in human history, and service interruptions are commonplace. Hydroelectricity from dams in the Himalayas and natural gas from Turkmenistan via the proposed TAPI pipeline could bolster the country’s energy mix, but the grid itself is in desperate need of an overhaul. In the meantime, intermittent production will continue to take its toll on the country’s growth.

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