FDI in power sector: Focussed approach is the key

Per capita consumption of electricity is one of the potent indicators of a society’s human development index. India’s per capita consumption has crossed the landmark 1000 kwph in 2015.  Still it lags behind the world average (3126 kwph) and is way behind some of the developed and middle income countries like China (4074 kwph).

Our growing urbanisation and economic growth means we would need a lot more electricity than what is available today. In the year 2015 the peak demand deficit for power stood at 3.5 percent.  A cursory glance at the statistics may elicit a response that it’s not much. But the narrow gap between demand and supply is due to subdued demand. Once the economic activities pick up pace there would be a yawning gap between demand and supply.

To bridge this gap and keep pace with the rising demand we need a lot of investments in power sector and the central as well as state governments can’t shoulder this responsibility alone. They need funds and foreign direct investment is a step in the right direction.


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