Power crisis again: Northern, Eastern grids fail

The Northern and Eastern Grids tripped today, leading to power failure in several states of the country affecting hundreds of millions of people.

While the Northern Grid collapsed for the second time in two days, the Eastern transmission lines too failed in the afternoon, said officials at the Power Ministry and electricity companies.

Power supply was disrupted in Delhi, Uttar Pradesh, Haryana, West Bengal, Assam and Punjab, among other states.

“Yes, I've heard that the Northern and Eastern grids have failed. We are looking into the matter. We are inquiring,” Power Minister Sushilkumar Shinde said.

The power crisis led to immediate shut-down of Delhi Metro lines in the national capital, while a host of other services including Railways were also affected.

“We are again having problems in Northern Grid,” K Soonee, CEO of Power System Operating Co (PSOC) said.

Power Ministry officials said Eastern Grid has also failed. The reasons for the grid failure were not immediately known.

While an almost 15-hour power crisis was seen in the Northern part yesterday, the crisis today reached the Eastern region as well.

Delhi government officials said the Northern Grid failed around 1.30 pm, when the national capital had a demand of around 4,000 MW. Only 38 MW was being supplied around 1.45 pm.

Again, Blackout. 12 states affected

New Delhi: Power supply to as many as 12 states has been disrupted after the Northern and Eastern supply grids failed. The crisis was allegedly triggered after states like Rajasthan and UP drew much more than their assigned share of power. Sources say UP and Haryana over-drew by 1200 MW each, for example. The supply to Delhi ay 1.30 pm was reduced to an all-time low of 40 MW against its demand of 4000 MW.   

Metro services on all six lines in Delhi have stopped. Upto 300 trains have reportedly been hit across the North. Shatabdis and Rajdhanis have been halted on their tracks.  

100 MWs of emergency power is being provided to VVIP areas in the capital.


A massive outage yesterday - the worst in a decade - left 370 million people in seven states and Delhi without power for many hours. The crisis then was caused by a collapse of the Northern grid.  Metro trains in Delhi yesterday were affected by that huge blackout, causing chaos during the morning rush hour.  500 passenger trains and 1.5 lakh people using them were affected by delays and cancellations.

Power Minister Sushil Kumar Shinde said yesterday that a three-member committee would determine the cause of the crisis. He refused to confirm whether the outage was caused by state like UP and Haryana drawing more than their allotted share of power.  

Blast in Assam: Army vehicles targeted; one jawan killed, 7 injured

Guwahati: At least one jawan was killed and seven others were injured in a high intensity blast in Assam's Goalpara district today. 

According to sources, an improvised explosive device or an IED exploded under an army truck carrying soldiers from Kokrajhar to Agia in Goalpara at around 10:25 am.  A Tata Sumo car travelling along with the truck was also targeted.

Banned outfit United Liberation Front of Asom or ULFA is said to be behind the blast.

RBI Credit Policy

The Reserve Bank of India's (RBI) macro-economic report has painted a gloomy picture about the Indian economy. It has lowered the FY13 GDP forecast between 6.5 and 7.2% and has noted the upside risk to inflation.

Highlights of macro economic report:

Growth:

The growth picture is pretty dismal. If we did 5.3% in the previous quarter we are likely to do no better in the current quarter. The dangers to growth come even from the global side, which looks pretty bleak now.

Inflation:

The consumer price inflation remains very sticky at double digits. It is not likely to go down because monsoon is questionable at the current juncture. Globally, the harvest is bad and a lot of economies worldwide are stimulating growth through cutting interest rates. Therefore, that could push up commodity prices.

Current account deficit:

The third major factor the report points out is the current account deficit. At the moment, we can't afford 4.2% current account deficit of last year although crude oil prices are falling, service and software exports have fallen.

The RBI has also pointed out that the Nasscom forecast cannot be met. Therefore, in the current year even 2.5% of current account deficit looks difficult to sustain.

No interest rate cut by RBI?

The conclusion one can draw from all this looks like given the inflation expectation and the current account deficit dangers the RBI is unlikely to stimulate demand by cutting interest rate at this juncture.

It believes that the government has to do its bit in the first place by cutting fiscal deficit and using that extra money to stimulate investment so that growth is generated, only then can space be created for monetary policy.

What does the poll indicate?

The CNBC-TV18 poll indicates something very similar although it was taken before the macro economic report. Ninety percent of people who were polled said they don't expect a repo rate cut. Only 10% expect a 25 bps repo rate cut. As far as the CRR is concerned, 90% do not expect a CRR cut; 5% expect 50 bps and another 5% expect a 25 bps.

The more important point that the market will watch out for will be the growth forecast of RBI. The GDP forecast in April was put in at 7.3, 90% of people who were surveyed said that they expect the forecast to be brought down. Of this 90%, 45% said it will be between 6.5 and 7.2.

The other half said it will be below 6.5% that is 6-6.5%. Ten percent people said it will be brought down to between 5.5% and 6%. So, there are people who expect GDP to come at 5 point something in the current year.

A large majority expect RBI’s inflation target to be brought up. Fifty five percent said it will be unchanged, 45% said it can be raised to 6.5% to 7% and few said even above 7%.

Sixty percent expect RBI’s stance to remain unchanged. Fourty percent believe that RBI can adopt a slightly dovish stance in the policy.

RBI expected to keep rates unchanged

The Reserve Bank of India (RBI) is expected to leave interest rates unchanged on Tuesday, seeing high inflation as a bigger danger than the slowest growth in almost a decade and keeping pressure on the government to revive the economy's fortunes.

Weaker-than-normal monsoon rains add to expectations that the RBI will keep its repo rate on hold at 8.00 per cent. High food prices resulting from poor rains may be beyond the reach of monetary policy, but they can add to inflationary expectations and tempt the government into spending more on subsidies.

Of 20 economists polled last week by Reuters, 19 expected the central bank to keep the repo rate unchanged.

After its mid-quarter policy review in June, roughly one-third of respondents had expected a July rate cut. Since then, RBI Governor Duvvuri Subbarao has voiced concern about high inflation, including for consumer prices, reinforcing expectations he will leave rates on hold.

Still, several market participants said the rapid deteriorating in the global economy as the euro zone debt crisis takes its toll suggested that the Indian central bank's decision may still be a close call.

"Over the past 6-8 weeks, the global situation has turned sharply adverse, and downside risks to the GDP growth projection have emerged. Upside risks to inflation seem limited at this juncture," said Hitendra Dave, head of global markets at HSBC in India.

On Monday, the RBI warned about a weakening growth outlook and upside risks to inflation in its quarterly review of the economy.

In June, wholesale price inflation rose to 7.25 per cent, while consumer price inflation hit 10.02 per cent. Wholesale prices are the main inflation gauge in India.

The RBI is also expected to leave the cash reserve ratio, the share of deposits that banks must keep with the RBI, unchanged at 4.75 per cent on Tuesday.

Indian stocks rallied on Monday, partly on hopes for a surprise rate cut, but debt markets remained cautious as benchmark 10-year bond yields rose slightly.

Subbarao has stressed the need for the government to reduce its fiscal deficit and improve the investment climate. He has said the central bank's 13 rate rises between March 2010 and October 2011, as it fought double digit inflation, were not the key reason for the slowdown in the economy, which grew at just 5.3 per cent in the March quarter, its weakest pace in 9 years.

The Indian central bank cut rates by a steeper-than-expected 50 basis points in April but has maintained a hawkish stance since, even in the face of widespread expectations in June it would cut rates again.

A continued hard line would make it an outlier compared with China, Brazil, South Korea and others, which have eased monetary policy in recent weeks to bolster their flagging economies.

The central bank has also been adamant that the government does its bit to boost the once high-flying economy.

It called on the government of Prime Minister Manmohan Singh to rein in spending on subsidies, but expectations that New Delhi may soon raise diesel prices to reduce its spending and borrowing burden and so alleviate pressure on market rates have been pushed back due to opposition from within the ruling coalition.

Singh spoke a month ago of reviving the economy's "animal spirit," but companies are still waiting for government measures, such as allowing foreign direct investment in supermarkets and airlines, to lift sentiment.

A study last week by Indian rating agency Crisil found that capital expenditure by 170 private-sector companies will fall by 35 percent on average in the fiscal year that ends in March.