UPDATE 2-India blackout leaves 300 million without power

(Adds nuclear shutdown, quotes)

NEW DELHI, July 30 (Reuters) - Grid failure left more than

300 million people without power in New Delhi and much of

northern India for hours on Monday in the worst blackout for

more than a decade, highlighting chronic infrastructure woes

holding back Asia's third-largest economy.

The lights in Delhi and seven states went out in the early

hours, leaving the capital's workers sweltering overnight and

then stranded at metro stations in the morning rush hour as

trains were cancelled.

Electricity supplies were restored to Delhi and much of

Uttar Pradesh, a state with more people than Brazil, by midday

(0630 GMT). But the states of Rajasthan, Punjab and Jammu and

Kashmir were still without full power in the early evening.

Power Minister Sushilkumar Shinde said all power would be

restored within hours.

Power shortages and a creaky road and rail network have

weighed heavily on the country's efforts to industrialize.

Grappling with the slowest economic growth in nine years, Delhi

recently scaled back a target to pump $1 trillion into

infrastructure over the next five years.

Major industries have dedicated power plants or large diesel

generators and are shielded from outages -- but the inconsistent

supply affects investment and disrupts small businesses. Office

blocks, hotels and large apartment buildings all use backup

diesel generators.

Chaos reigned on Delhi's always-hectic roads on Monday as

stop lights failed and thousands of commuters abandoned the

metro. Water pumping stations ran dry.

"First, no power since 2 in the morning, then no water to

take a shower and now the metro is delayed by 13 minutes after

being stuck in traffic for half an hour," said 32-year-old

Keshav Shah, who works 30 km outside the capital.

"As if I wasn't dreading Monday enough, this had to happen."

The government's top economic planning adviser, Montek Singh

Ahluwalia, said the blackout may have been caused by a mix of

coal shortages and other problems on the grid.

"I've no doubt that this is the area that we need to show

improved performance in, and we also need show a clear sense of

what we are doing to prevent it," Ahluwalia told Reuters at his

office, where power had been restored some hours earlier.

WEAK MONSOON

He said the grid was better networked now than five years

ago and power sharing was more common.

But blackouts lasting up to eight hours a day are frequent

in much of the country and have sparked angry protests on the

industrial fringes of Delhi this summer, the hottest in years.

At least 200 trains were cancelled with some stranded.

Authorities made restoring services to hospitals and transport

systems a priority.

Shinde blamed the outage on an incident near Agra, the home

of the Taj Mahal, without giving details. He said repairs were

being carried out fast compared to a similar grid outage in the

United States four years ago.

"In 2008, there was a power failure in the USA. Their

Federal Energy Regulatory Commission asked India for assistance

and it took four days to restore the power," he told reporters.

India suffers a peak hour power deficit of about 10 percent.

It has been made worse this year by a weak monsoon, driving

demand from farmers pumping more water from wells.

The outage forced the shutdown of a nuclear power plant at

Rawatbhata in the desert state of Rajasthan. It will take about

48 hours to restart. Hydroelectric plants in the Himalayas and

thermal power stations in the wheat belt of Punjab and Haryana

were slowly returning to normal.

India has the world's fifth-largest coal reserves and relies

on it for two-thirds of its power generation. Wrangles over land

and environmental clearances and failure to invest in new mines

and technology have held back coal output as demand rises.

Officials at Delhi's international airport said flights were

unaffected. Delhi's private power company, BSES, said

northern India last not suffered such a major outage since 2001.

"This kind of breakdown shows that the system needs some big

overhaul to increase credibility and increase the confidence in

the system of India," said Jagannadhan Thunuguntla, equity head

at Delhi-based brokerage SMC Capital.

"More homework needs to be done."

(Additional reporting by Sanjeev Choudhary, Ketan Bondre,

Anurag Kotoky, Rajesh Kumar, Nidhi Verma, Matthias Williams,

Sharat Pradhan and Nandita Bose; Writing by Frank Jack Daniel;

Editing by Nick Macfie)