India's Energy Scenario

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Energy in India for the Coming Decades

Anil Kakodkar

Chairman, Atomic Energy Commission, India

The reforms initiated in India since the beginning of the nineties have led to rapid economic progress and better growth rates. In the first decade of this century the growth rates seem to be still better. Studies by several academics and consultants forecast continued high growth rate for the next several decades. I’ll quote two such studies, one by Dominic Wilson and Roopa Purushothaman of Goldmann Sachs [1] and the other by Dani Rodrik and Arvind Subramanian of the International Monetary Fund [2].

Wilson and Purushothaman write, “India has the potential to show the fastest growth over the next 30 to 50 years. Growth rate could be higher than 5 percent over the next 30 years and close to 5 percent as late as 2050 if development proceeds successfully.” Rodrik and Subramanian write, “…..growth in capital stock together with growth in factor productivity will yield output growth of 5.4 percent. Over the next 20 years, the working age population is projected to grow at 1.9 percent per year. If educational attainment and participation rates remain unchanged, labor growth will contribute another 1.3 percent, yielding an aggregate growth rate of 6.7 percent per year, or a per capita growth rate of 5.3 percent. This is a lower bound estimate and, even so, would be significantly greater than the per capita growth rate of 3.6 percent achieved in the 1980s and 1990s. Over a 40-year period, a 5.3 percent growth rate would increase the income of the average person nearly 8-fold.”

Growth in economy is made possible by several inputs, the two most important being energy and human resource. In this conference, we are concerned about energy and so I’ll confine myself to energy. Energy is the engine for growth. It multiplies human labour and increases productivity in agriculture, industry as well as in services. To sustain the growth rate in economy, energy supply has to grow in tandem.

For a large country like India with its over one billion population and rapid economic growth rate, no single energy resource or technology constitutes a panacea to address all issues related to availability of fuel supplies, environmental impact, particularly, climate change, and health externalities. Therefore, it is necessary that all non-carbon emitting resources become an integral part of an energy mix – as diversified as possible – to ensure energy security to a country like India during the present century. Available sources are low carbon fossil fuels, renewables and nuclear energy and all these should be subject of increased level of research, development, demonstration and deployment.

In the Department of Atomic Energy, we have conducted a study with the aim to quantify the likely growth in energy demand in India, and the role nuclear energy has to play in the decades to come. The ultimate objective was to formulate a strategic plan to meet the projected role to be played by nuclear energy [3]. Energy intensity of GDP, defined as the ratio of the energy consumption to the GDP, has been observed to follow a certain trend worldwide. Below a certain level of development, growth results in increase in energy intensity. With further growth in economy, the energy intensity starts declining. Based on data by International Energy Agency [4], overall energy intensity of GDP in India is the same as in OECD countries, when GDP is calculated in terms of the purchasing power parity (PPP). Energy-GDP elasticity, the ratio of the growth rates of the two, remained around 1.3 from early fifties to mid-seventies. Since then it has been continuously decreasing. Electricity is the most important component of the primary energy. Electricity-GDP elasticity was 3.0 till the mid-sixties. It has also decreased since then. Reasons for these energy–economy elasticity changes are: demographic shifts from rural to urban areas, structural...
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