(EnergyAsia, October 14 2014, Tuesday) — Elected on high hopes that it would revive India’s stuttering economy, the five-month-old government of Prime Minister Narendra Modi has yet to show that it has a plan to solve the country’s worsening power supply shortages that contributed to the previous government’s downfall.

The sharp decline in global oil, gas and coal prices since June has partly masked the growing seriousness of the power crisis that many consider is the biggest challenge to India’s long-term economic development.

But there’s no hiding the disruptive impact of unreliable power supply on the daily lives of residents as well as businesses which have had to scale back investment plans that contributed to the sharp slowdown in India’s economic growth rate since the start of the decade.

Giving his first major assessment of India’s energy challenge in September, Power and Coal Minister Piyush Goyal blamed the previous government for leaving behind a dysfunctional coal supply system and some US$50 billion in losses at state-owned electricity firms.

At a news briefing, he suggested the Modi government would be unable to solve the country’s energy crisis, in particular the coal supply problems that had built up since Manmohan Singh became Prime Minister in 2004. Under Singh, who took on the additional role of coal minister from 2004 to 2009, India’s energy shortages worsened as many power plants were unable to obtain coal supply that generate some 70% of the country’s electricity.

Coal stockpiles at the country’s 100 thermal power plants have fallen to six days of consumption, said the Central Energy Authority. This would make it the lowest coal stockpile level since the summer of 2012 that idled power plants causing India to suffer a world record electricity supply disruption to some 700 million people for three days.

India’s Supreme Court recently ruled that New Delhi had illegally awarded “captive” contracts to politically connected companies to develop and mine coal deposits since 1993. Most do not have the expertise or motivation to produce coal from the more than 200 blocks awarded, instead using them to trade favours.

According to a 2012 government audit, the scandal may have cost the government a total of US$33 billion in lost revenue and expenses from coal imports.

Despite sitting on one of the world’s largest coal reserves, India was forced to import the fuel at high prices to ensure the operation of its power plants. State-owned Coal India, which accounts for 80% of domestic production, said it might be able to supply just 378 million tonnes of its planned 408 million tonnes to power companies for the current year to March 31, 2015.

In June, US consulting firm IHS warned that India’s energy crisis would rank as one of the country’s most important threats.

“India’s economy is fragile, struggling with low growth and high inflation. One of the key factors underlying the difficult economic outlook is India’s unfolding energy crisis,” said Rajiv Biswas, IHS’s chief economist for the Asia Pacific region.