I uninstalled grunt with following command.
npm uninstall -g grunt
Then I again installed grunt with following command.
npm ins
This solved the issue for me. I mistakenly installed grunt using:
sudo npm install -g grunt --save-dev
and then ran the following command in the project folder:
npm install
This resulted in the error seen by the author of the question. I then uninstalled grunt using:
sudo npm uninstall -g grunt
Deleted the node_modules folder. And reinstalled grunt using:
npm install grunt --save-dev
and running the following in the project folder:
npm install
For some odd reason when you global install grunt using -g and then uninstall it, the node_modules folder holds on to something that prevents grunt from being installed locally to the project folder.