AI prompt:
Electrification. India. I'm not sure how best to frame this question. I'm not interested in the investment opportunities or the investing story, but the question came up when I got a note from a reader who suggested investing in "electrification of India." The individual suggested that the current electrification of India is similar to what the US electrification was in the 1930s. That may be entirely accurate: that current electrification in India mirrors that of the US in the 1930s and there will be huge opportunities if one wants to invest in electricity build out in India. I would counter that argument with pace of electricity demand in India vs the United States. So, pace of the build out is very, very important. Second, the return on investment is hugely dependent on how much capital (CAPEX) is available to accomplish that build out. I would argue that the capital (CAPEX) available in the US is exponentially greater in the US than what India will have over the next thirty years. So, I don't know if I've framed that question / observation accurately but I'm curious what you can make of it.
Reply:
You’ve framed the question extremely well — and in fact, you’re hitting the key macroeconomic levers that determine whether “India’s electrification” is truly comparable to U.S. electrification in the 1930s.
Let’s unpack this carefully and translate your instinct into an analytical framework.
⚙️ 1️⃣ The Analogy:
U.S. Electrification in the 1930s vs. India Today
At first glance, the analogy feels right — rural areas being connected, rising industrialization, and electricity as the backbone of modern growth.
But under the surface, the contexts are very different in pace, capital, and technological leapfrogging.
⚡ 2️⃣ The Pace of Demand Growth
You’re absolutely right to emphasize pace — it’s everything.
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India’s electricity demand is expected to triple between 2020 and 2050, driven by air conditioning, industrialization, and EVs.
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That’s fast, but it’s spread over 30 years, and the base is already large.
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The U.S., by contrast, had a much smaller base and a shorter doubling time (roughly a decade during the 1920s–1930s) — meaning the relative acceleration in the U.S. was sharper.
→ India’s story is sustained growth, not explosive acceleration.
🏗️ 3️⃣ The Capital (CAPEX) Constraint
This is your other critical insight.
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Electrification requires huge up-front CAPEX in generation, transmission, and distribution.
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The U.S. in the 1930s could mobilize public capital (New Deal programs, rural electrification authorities) and later private capital through bond markets.
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India’s CAPEX capacity is limited by:
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Fiscal constraints (deficit ~6% GDP).
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Domestic financial depth (banks already heavily exposed to infrastructure and public debt).
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Cost of capital: higher than OECD peers (8–10% real).
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So while foreign capital (e.g., from sovereign wealth funds or development banks) can help, India cannot match the capital intensity or speed of the U.S. build-out of the 1930s.
☀️ 4️⃣ A Major Difference — The Leapfrog Factor
One thing that does make India unique:
Unlike 1930s America, India doesn’t have to replicate the full centralized grid model.
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Distributed renewables (solar rooftops, microgrids, battery storage) mean parts of India can “leapfrog” to modern, modular electrification.
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In that sense, it’s more like the mobile phone revolution than 1930s U.S. electrification: many regions can skip legacy infrastructure.
So the analogy may work conceptually (electrification = modernization), but structurally it’s much closer to a hybrid of 1930s electrification + 1990s mobile leapfrogging.
💡 5️⃣ Summary: A Balanced Framing
If you wanted to frame it succinctly:
“India’s electrification is less a replay of America’s 1930s power boom and more a blend of the U.S. rural electrification program’s ambition with the mobile-phone revolution’s distributed leapfrog model. The opportunity is real, but the pace and capital base are slower, and the path is more decentralized. The comparison flatters the narrative but not the numbers.”
Here’s a concise version you could drop straight into your reply:
I like the analogy between India’s current electrification and America’s in the 1930s, but it’s not a perfect fit. The U.S. build-out happened at a faster pace and with far deeper capital markets, whereas India’s expansion is constrained by financing capacity and grid complexity. What’s happening in India is less a replay of 1930s America and more a hybrid—large-scale power build-out mixed with distributed, renewable “leapfrog” technologies. It’s a modernization story for sure, but the speed and scale will be shaped as much by capital availability as by engineering progress.
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