Why India needs to bring structural changes in its energy sector? How to address challenges to bring those changes?

As India is emerging as the fastest growing economy of the world, the energy security is of immense importance. Hence, bringing a structural change in the sector becomes a pre-requisite.

Why India needs to bring structural changes in the sector?
  • Between 2000 and 2015, when India’s GDP grew at 7 per cent a year and energy demand grew at 4.5 per cent a year. The annual growth in domestic production of energy was only 3 per cent, and imports therefore had to grow at 8.5 per cent to meet the demand.
  • The share of energy needs met through imports has increased from 21 per cent in 2000 to 36 per cent by 2015. If similar trends continue nearly half of the demand in 2040 would have to be met by imports.
  • India’s energy import bill now stands at a record high of $125 billion. It is estimated that by 2040 the import energy bill would be as high as $660 billion. Getting such a huge quantum of dollars to pay would be a humongous task.
  • This huge import bill and the need to pay in dollars may put India at the risk struggling to pay the import energy bill.
Addressing the Challenges
  • Freeing of energy pricing. Controlled and distorted pricing has resulted in inefficiency in the usage.
  • Even though monopoly of coal India was ended, no licences have been issued to private enterprises.
  • India needs to move power than coal. This needs development of an efficient national power grid. Moving power rather than coal would be cheaper, easier and less wasteful.

Being located in the tropical zone, India has been blessed with renewable energies like solar and wind. India can revamp the renewable energy sector by up scaling its targets as even if solar and wind capacity reaches 650 Gigawatts by 2040, as it would be just 4% of its energy needs.


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