At peak times, demand outstrips supply by over 10 percent, according to the Planning Commission.
"When a network grows you need more staff to police the network. If I don't see staff for a few months, it's easy for me to go hook onto a wire," Rao said. "The utility staff that comes around could just turn a blind eye. It's no different than passing a buck to a traffic cop, saying, 'Hey, let me go.'"
Lack of staff also means broken meters go unfixed and new areas are hooked to the grid before a billing system is in place, adding to losses, he said.
Pressure for price hikes is building, Rao said. Banks have stopped lending to state utilities, which has forced them to ration electricity because they don't have enough cash to buy more power, he said.
"People get upset," he said. "They say, 'Increase the tariff, just give us better supply.'"
The failure of Indian utilities has wider repercussions for the economy, argues Eurasia Group analyst Seema Desai.
It puts at risk the finances of private companies that sell utilities power, creating a disincentive to investment in a sector that badly needs it.
India's mainly state-backed banks loaned a lot of money to power companies and face large write-downs that could lead to a credit crunch, she said.
The timing could not be worse for New Delhi, which is under pressure to reduce its fiscal deficit even as slowing growth imperils tax revenue.
"Banks will take a hit," Desai said. "At some point it will fall on the central government to recapitalize the banks."
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