India’s looming power crisis: An analysis

Electricity is critical to fuel the economic growth of India. The country is on the fast trajectory of development but to keep the momentum of growth high, availability of uninterrupted power supply is a must. India needs electricity to fuel the growth of every industry, be it large-scale or smallscale, manufacturing, healthcare or education.

There are many roadblocks in unleashing the full potential of India’s power sector. One is fuel availability concerns faced by the industry. Coal supply by Coal India Ltd (CIL) is restricted to around 65% of actual coal requirement by coal-based thermal plants, leading to increased dependence on imported coal. This results in increasing power generation costs due to limited fuel availability. Increasing operational inefficiencies and outstanding debts have led to poor financial health of state discoms. Then there are other concerns such as land acquisition which has made purchase of land for power projects very expensive. Installation of power plants in any case, requires huge investments and the land acquisition cost pushes the capex to unprofitable and unsustainable levels.

India has been dependent to a large extent on energy imports to meet its national energy requirements. As per the estimates of Planning Commission, Government of India (GoI), to ensure a sustained 8% growth of the economy, by 203132 India needs to increase its primary energy supply by three to four times and its electricity generation by five to six times of the 2003-04 levels. To limit the dependency on energy imports and contribute in meeting this energy challenge, the government is also laying a lot of emphasis on energy efficiency and demand side management. Efforts are being made to increase supply from renewable sources of energy and promote energy conservation in various consumption sectors through appropriate policy interventions.

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