INDIA’S GREAT VULNERABILITY: ENERGY INSECURITY

The search for energy security is a major driver of change in the world order today. It
is a veritable new great game, engaging players across the globe, industrial and
industrialising countries, energy suppliers and consumers. It is spawning a web of
bilateral and multilateral deals for securing stable access to energy sources in conflict,
competition or cooperation with each other.
Next to water shortage, energy deficit is India’s greatest economic vulnerability. Its
incremental energy demand over the coming decade is projected to be among the
highest in the world. This stems from accelerating economic growth, scarcity of
domestic energy resources, increasing population and an expanding cohort of highenergy
consuming middle class with rising incomes. Populist offerings to the rural
population and urban have-nots, who together comprise a majority of the electorate,
are adding to the energy crunch. Within a democratic framework, no federal or state
government can hope to survive without this bank of votes. Hence, the hybrid pricing
models across the country, ranging from free power to a cocktail of subsidies to
turning a blind eye to massive electricity thefts.
The galloping oil bill is costing the exchequer over 30 percent in foreign exchange
reserves. There are no prospects of prices falling in the short to medium term. The
massive industrialisation in China and India, comprising some 2.5 billion people, is
fuelling the competition for scarce resources between traditionally low and high
energy user nations.
According to Prime Minister Singh, an investment of around US$130 billion is
necessary in the power sector alone to boost generation, upgrade transmission and
distribution networks. India needs to install an additional 100,000 MW power
generation capacity to meet the goal of ‘Power for All’ by 2012. That is considered
the minimum requirement to sustain the Government’s target of 8 percent annual
GDP growth rate.