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• India's power, telecoms and aviation sectors, core to sustaining the country's growth, are in various states of crisis. That may prove a good thing, if it forces government to act. Regulations in all three industries have kept prices low and brought power, cellphone service and even air travel to millions of Indians for the first time. The same policies have left many operators battered by losses, debt, and plunging share prices. The recent debacle over foreign supermarkets, India announced that it would allow entry to the likes of Wal-Mart Stores Inc before putting the plan on hold in the face of intense political opposition, underscores the difficulty of pushing through reforms in the world's largest democracy.
• Conditions in all three sectors are likely to worsen before improving, said Saurabh Mukherjea, head of equities at Ambit Capital in Mumbai. "You'll probably see some big-ticket defaults before things start getting better and you'll need the government of India to get back to work before things start getting better," he said. Power, telecoms and airlines are capital-intensive sectors that attracted heavy investment when the regulatory environment was more favourable and global capital was plentiful and cheap. That has left India crowded with more than a dozen cellular carriers, loss-making airlines with too many planes and billions of dollars of investments in a power sector made uneconomic by high global prices of coal and low domestic tariffs.
• Many investors once keen on India's long-term growth have had enough as global and domestic economic conditions worsen, making Indian stocks among the world's worst performers of 2011. Despite passenger growth of nearly 20 percent, shares in India's three listed airlines are down between 62 and 72 percent in 2011. The index of power stocks is down 32 percent even as electricity demand far outstrips supply. Crisis has historically been a spur for New Delhi to act. Reforms that would improve conditions in telecoms, aviation and power are less polarising than the move to allow global players into multibrand retail and there are recent glimmers of hope for operators in all three industries. "I think out of all this we'll see some positive change, because the change only comes when the crisis is at its highest point," said David Cornell, a director in Mumbai for UK-based fund manager Ocean Dial. "Have we got to the point of maximum crisis yet? Perhaps not."

HAVING IT BOTH WAYS

• The plight of liquor baron Vijay Mallya's Kingfisher Airlines, scrambling to keep creditors at bay as it tries to raise equity, is an example of the gap between India's industrial aspirations and the problem of how to pay for them. Taxes make jet fuel in India 60-70 percent more costly than the global average, but fares are cheap as loss-making state-run Air India sells tickets below cost, prompting others to respond. Cellphone calls cost about 1 US cent per minute, the lowest just about anywhere, but carriers pay 19-28 percent of their revenue to the government, according to a PwC report, a bigger share than in neighbouring countries or in Europe.

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