Energy is an essential input for the economic development of a country in improving the quality of life of its people. For meeting the growing energy needs of the society at a reasonable cost, power development in India started at the end of the 19th century. To contribute significantly to the overall energy availability in the country, sustained attention is being given to develop and promote non-conventional, alternate and renewable sources of energy as also for the development of nuclear energy. 

Today the installed power generation capacity in the country has increased from 1,400 MW in 1947 to 1,04,917.50 MW at the end of 2001-02 comprising 26,261.22 MW hydro, 74,428.82 MW thermal (including gas and diesel), 1,507.46 MW wind and 2720 MW nuclear. In spite of this increase in installed capacity, the energy shortage in India is of the order of approximately 9 per cent. The peak shortage of power averages almost 15 per cent. The per capita consumption of the power in the country is only 350 units, much below the consumption levels in developed countries. In order to provide power to all by 2012, additional capacity of 100,000 MW will have to be set up in the next decade. Capacity addition plans for 41,110 MW have been finalized State-wise and project-wise for the Tenth Plan period (2002-07). In the central sector, State sector and private sector the capacity addition would be 22,832 MW, 11,157 MW and 7,121 MW respectively. For the year 2002-03, a capacity addition programme of 4109.10 MW has been fixed. The Power generation during 2001-02 was 515.271 BUs comprising 422.001 BUs thermal, 73.992 BUs hydro and 19.278 BUs nuclear. The target of power generation for 2002-03 has been fixed at 545.552 BUs. The plant load factor has shown a steady improvement over the years and has improved from 52.8 per cent in 1990-91 to 69.9 per cent in 2001-02.

To achieve the target of providing power to all by 2012, the Centre has initiated a number of steps with the help of the States. These include a programme initiated by the Power Ministry for accelerated and planned hydro development after an overall assessment and prioritization with a view to harness an unharnessed estimated hydro potential of more than 150,000 MW and attain the ideal hydro thermal mix ratio of 40:60 which is presently 25:70. In Central Sector, various hydro schemes with a capacity of over 28000 MW are under different stages of development.
The outlay for power sector during the Xth Plan period was enhanced to about Rs.143,000 crore which is approximately 214 per cent higher than the IX Plan outlay.

For a phased development of National Power Grid a number of schemes have been planned such as interconnections link to the northern, western, southern and eastern regions in addition to the existing interconnections. Today the inter-regional power transfer capacity is 4,850 MW. It has been planned to enhance to the level of 30,000 MW by 2012 through various inter-regional links along with transmission highways. Unified load despatch centres are being commissioned for northern and southern regions to help regulate the respective grids.

The Government is pursuing reform measures expeditiously. The Central Electricity Regulatory Commission, formed under the provisions of Electricity Commission Act, 1998 has been made fully functional. The Commission has passed orders on availability-based tariff and has also notified terms and conditions for determination of tariff. Twenty States have either constituted or notified the constitution of State Electricity Regulatory Commissions (SERCs).
Twenty-one States have signed MOUs with the Central Government. The MOUs are broadly joint commitment to undertake reforms in a time -bound manner.

The Electricity Bill, which has a liberalized framework for the power sector, has been introduced in Parliament. The Bill seeks to replace the three existing Acts, namely the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998. The Bill is presently under consideration of the Standing Committee on Energy.
A draft declaration on common minimum programme on Power has been circulated to all political parties for consensus and interactive meetings.

For restoration of the financial viability of the State utilities, their outstanding dues payable to CPSUs amounting to more than Rs.41,000 crore have been securitized as part of one-time settlement. This will restore the creditworthiness of State power utilities. In this regard 12 States have signed tripartite agreements while 9 others have agreed in principle.
The MOU has been signed with the States to undertake reforms with specific financial and technical support from the Government. The Central assistance includes the support for upgradation of transmission and distribution network including energy accounting and metering and renovation and modernization of thermal and hydro generating units through Accelerated Power Development Reform Programme (APDRP). Under this six levels intervention strategy for distribution reforms has been outlined. Technical manuals were circulated to States for reduction of losses and improvement in quality and reliability of power supply. 

To communicate with the general public and gather consumer support for reforms 2,085 road shows were conducted as part of awareness programme in all States at district and State capital level. The Power Minister addressed over 6 lakh personal letters to opinion makers, prominent citizens and power utilities employees all over the country highlighting the issues relating to power sector and enlisting their support. Electrification of villages is included in the Prime Minister Gramodaya Yojana.

Power Trading Corporation of India Ltd. has been set up with equity participation from PSUs and others for transfer of power from surplus to deficit locations at different points of time. It will also work as the nodal agency for exchange of power with the neighbouring countries.
Energy conservation decreases the need for additional capacity, reduces tariff burden on consumers and preserves the environment. 

Tenders and purchase inquiries of power utilities at Central and State levels have been put on website to bring transparency in the functioning of the power sector. Various important key documents have been put on website.

It is being ensured that the generating stations meet world-class environmental standards. Besides massive planned afforestation, work is going on in full swing in areas like fly ash utilization.