From the Raj to Independence: British investment in the Indian electricity sector

During the colonial times, electricity in India developed for a significant part thanks to British investment. Its growth remained modest and mainly linked to industrial needs, public lighting and common transportation. World War II stimulated industrial production and, consequently, the demand for electricity. The immediate years following the war were even more promising since the preparations for national Independence included a major restructuring of electricity generation and distribution. The 1948 Law on electricity and the first 5-year plans which began in 1951 set the framework for a major development. Instead of nationalization, India chose a policy which allowed for the participation of both private and public enterprises. British and Indian private investment responded positively to the change. At the beginning of the 1950s, the British presence was felt in the power industry. However, a decade later, it was already diminishing. This paper explains the nature of the policy which allowed a partnership between private and public sectors, the reasons why the latter finally prevailed over the former and the consequences on British investment.