India's Energy Crisis

2012.11.01

India's Energy Crisis

It seems that development of the world's seventh largest and second most populous country has come to a halt, The Wall Street Journal reports.

The South Asian subcontinent, which is in fierce competition with other major powers in Asia such as Japan, China and South Korea, faces shortages of coal, oil and natural gas. To make the situation even worse, most of its oil import comes from nearby Iran, a focus point of international political turmoil.


While there are natural deposits of oil on the Indian subcontinent, domestic production is not sufficient for the estimated 1.2 billion people of the country that consists of 28 states. The energy demand of the economy is increasing at a rapid pace, in fact, it is growing exponentially. In 2011, India spent 41% more on fossil fuel imports than in the previous year. Yet, at stake is India's ability to bring electricity to 400 million of its citizens as well as a number of big cities, centers of bustling business life.


Another serious situation was encountered when coal stocks in 32 power plants were so low that for a period of seven days two dozen plants were running at less than 60% capacity. As a result, several high-profile investment projects had to be deferred until some blurred dates in the future. In addition to the partial paralysis of cities and the failure to launch industrial investment projects, rural regions also suffer from the energy crisis. In certain areas, essential medicines that need cooling are not available at all, due to disruptions to power supply. Moreover, irrigation pumps stopped working.


The Indian economy with its earlier dynamic growth projections experiences a dramatic slowdown at the moment. Also, initiated reforms have stopped. And the potential advantage of decreasing world market prices of crude oil has been absorbed by lower rupee exchange rates.

 
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