Skip to main content

India’s new government: 100 days on

Hydrocarbon Engineering,


India’s Prime Minister Narendra Modi and the Bharatija Janata Party have now been in office for 100 days. According to Wood Mackenzie, the government – which is India’s first majority administration since 1984 – inherited a number of challenges, including a slowing economy and weakening energy demand growth.

State of play when Modi took office:

  • The government inherited structural problems in the energy sector and slowing economy. On the campaign trail, Modi pitched a reform agenda, and promised to restore growth to India.
  • In recent years, India’s growth in per capita energy demand has stagnated – a disappointing trend in a country where a sizeable proportion of the population has limited access to anything but traditional fuels.

According to Wood Mackenzie, over the first 100 days progress has been made:

  • Control of India’s coal, power, mining and renewables industries has been consolidated, which should help to accelerate reform. A Presidential speech in July contained a strong energy component, and the Prime Minister has emphasized the need to reinvigorate India’s manufacturing sector, restart stalled infrastructure projects, and build a new generation of ‘smart’ cities’. All of these ambitions imply robust energy demand growth.
  • There are some concerns that the government is not capitalizing on it mandate for change, and is instead pursuing gradual rather than radical reform. Progress to date suggests the government’s priorities are weighted towards maintaining stability, rather than taking decisive steps in areas such as energy subsidies.
  • Nevertheless, the government’s aims are ambitious, and if reached, would imply a dramatic upside to India’s long term energy demand. In his previous role as Chief Minister of Gujarat State, one of Modi’s key achievements was the provision of reliable electricity supply. Modi plans to deliver this for India as a whole. If this were achieved, the country would need 500 terrawatt hours (TWh) of additional power supply by 2030 – approximately the total electricity demand of South Korea in 2010.

Energy is not the government’s main priority, however Wood Mackenzie holds that in a country where the working age population will swell by 200 million people over the next fifteen years, population size is the key risk to India’s long term energy demand. Small changes to metrics such as electricity demand per capita could have a huge aggregate effect. The firm believes that if successful reform can be delivered, an enormous upside demand could be the result.


Adapted from a press release by Emma McAleavey.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/04092014/100-days-in-office-1230/


 

Embed article link: (copy the HTML code below):