Stretching from Assam, near China, to the Himalayas and the northwestern deserts of Rajasthan, the outage was the worst to hit India in more than a decade and embarrassed the government, which has failed to build up enough power capacity to meet soaring demand.

"Even before we could figure out the reason for yesterday's failure, we had more grid failures today," said R. N. Nayak, chairman of the state-run Power Grid Corporation.

Prime Minister Manmohan Singh has vowed to fast-track stalled power and infrastructure projects as well as introduce free market reforms aimed at reviving India's flagging economy. But he has drawn fire for dragging his feet.

By the afternoon rush-hour, only about 40 percent of power was back up. Electricity had not been restored to all of the sweltering capital, New Delhi, and streets were clogged with commuters trying to get home.

"It's certainly shameful. Power is a very basic amenity and situations like these should not occur," said Unnayan Amitabh, 19, an intern with HSBC bank in New Delhi, as he was giving up on the underground train system and flagging down an auto-rickshaw to get home.

"They talk about big ticket reforms but can't get something as essential as power supply right."

Power Minister Sushilkumar Shinde blamed the system collapse on some states drawing more than their share of electricity from the over-burdened grid.

Asia's third-largest economy suffers a peak-hour power deficit of about 10 percent, dragging on economic growth.

"This is the second day that something like this has happened. I've given instructions that whoever overdraws power will be punished," said Shinde, hours before he was promoted to interior minister in a cabinet reshuffle.

More than a dozen states with a population of 670 million people were without power.

Two hundred miners were stranded in three deep coal shafts in the state of West Bengal when their electric elevators stopped working. Eastern Coalfields Limited official Niladri Roy said workers at the mines, one of which is 700 metres (3,000 feet) deep, were not in danger and were being taken out.

Train stations in Kolkata were swamped and traffic jammed the streets after government offices closed early in the dilapidated coastal city of 5 million people.

The power failed in some major city hospitals and office buildings had to fire up diesel generators.

By mid-evening, services had been restored on the New Delhi metro system.

"PUSHED INTO DARKNESS"

On Monday, India was forced to buy extra power from the tiny neighbouring kingdom of Bhutan to help it recover from a blackout that hit more than 300,000 million people.

Indians took to social networking sites to ridicule the United Progressive Alliance UPA.L government, in part for promoting Shinde despite the power cuts.

Narendra Modi, an opposition leader and chief minister in Gujarat, a state that enjoys a surplus of power, was scornful.

"With poor economic management UPA has emptied pockets of common man; kept stomachs hungry with inflation & today pushed them into darkness!," he said on his Twitter account.

The country's southern and western grids were supplying power to help restore services, officials said.

The problem has been made worse by a weak monsoon in agricultural states such as wheat-belt Punjab and Uttar Pradesh in the Ganges plain, which has a larger population than Brazil.

With less rain to irrigate crops, more farmers resort to electric pumps to draw water from wells.

India's electricity distribution and transmission is mostly state run, with private companies operating in Delhi, Mumbai and Kolkata. Less than a quarter of generation is private nationwide.

More than half the country's electricity is generated by coal, with hydro power and nuclear also contributing.

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, the government recently scaled back a target to pump $1 trillion into infrastructure over the next five years.

Major industries have their own power plants or diesel generators and are shielded from outages. But the inconsistent supply hits investment and disrupts small businesses.

High consumption of heavily subsidized diesel by farmers and businesses has fuelled a gaping fiscal deficit that the government has vowed to tackle to restore confidence in the economy.

But the poor monsoon means a subsidy cut is politically difficult.

On Tuesday, the central bank cut its economic growth outlook for the fiscal year that ends in March to 6.5 percent, from the 7.3 percent assumption made in April, putting its outlook closer to that of many private economists.

"This is going to have a substantial adverse impact on the overall economic activity. Power failure for two consecutive days hits sentiment very badly," said N. Bhanumurthy, a senior economist at National Institute of Public Finance and Policy. (Reporting by Delhi Bureau and Sujoy Dhar in Kolkata; Writing by Frank Jack Daniel; Editing by Robert Birsel)

• A Permanent Economic Emergency