"The scene in the power sector does not look very promising... in fact, time is running out, and unless we are able to arrest the growing shortages, the effect on our economy may well prove disastrous," he said at a conference of state chief ministers on power sector.

Singh said electricity was vital for sustained economic growth and a commensurate growth in power supply was required to ensure that the economy keeps growing at 9-10 per cent.

Listing his priorities, he said the states and the Centre must take effective steps to check losses during Transmission and Distribution of electricity. "The current level of T&D losses, ranging between 30-45 per cent in many states, threatens the financial health of the sector... theft is the cancer of power sector," he said.

The Prime Minister also expressed concern over the slow pace of capacity addition, with only half of the 10th plan target of 41,000 MW being met in the five-year period. "This reflects poorly on the planning process as well as the implementation capability of the various agencies in the states and the Centre, who were entrusted this task," he said.

Singh said the sector required a "crash programme" for capacity addition to eliminate shortages by 2012 and pegged the investment needs at over Rs 600,000 crores during the 11th Plan period.