India’s annual energy import bill could almost double to $230 billion (`13.8 lakh crore) in the next decade if India does not switch from oil to natural gas and improves conservation activities.
According to a Goldman Sachs report, the country’s annual energy imports in the next decade could go up to $230 billion from $120 billion (` 7.2 lakh crore) currently, driven by economic growth, greater industrialisation and urbanisation. The report added that measures like switching from oil to natural gas and improving conservation activities can reduce energy imports of the country significantly.
India is facing energy challenges as the country doesn’t produce enough to meet its needs. In 2013-14, India’s net energy imports were 6.3% of its gross domestic product (GDP). The report noted, “India has a fifth of the world’s population, but only a 30th of its energy”.
“Reforms in the energy sector could reduce India’s annual energy import bill by $40 billion (`2.4 lakh crore) by 2022-2023. Energy imports in a reform scenario could come down to about 4% of GDP, from 6.3% of GDP currently,” Goldman Sachs said.
The report further said if India improves energy efficiency by 15% over the next decade, it could save $32 billion per annum by 2022-23.
Energy conservation measures include reducing transmission and distribution losses, using more energy efficient appliances , switching to alternative sources of energy and stricter emission standards for vehicles.
Moreover, the reduction in energy imports as a share of GDP could help India reduce its current account deficit on a structural basis, which in turn could be positive for the currency over the medium term.
It may be recalled that on July 30th 2012, India’s northern electricity grid broke down due to overdrawing of power by states, leaving more than half of the country’s population in darkness.