India’s sustained economic growth will not happen without a parallel and steady increase in energy usage. That will increase at roughly the same rate as the GDP growth for the next two decades. We need to increase electricity for households, factories and offices, and fuel for transportation. Three-fourths of India’s electricity is produced from coal, and the remaining is from renewable sources such as solar, wind, hydro, nuclear and biomass. The installed capacity of renewables has reached nearly 50 per cent of the total, but production is at 25 per cent. India has the third largest deposits of coal but still needs to import more than one-fifth of its requirement. That means an outgo of $20 billion or more for importing coal.

For transportation, the import dependence is higher. Nearly 90 per cent of the crude oil consumed is imported, clocking 242 million tonnes last year. Depending on international prices, say in a range of $65 to $85, it drains 125 to 150 billion dollars from India’s foreign exchange. At higher oil prices, the forex burden is much higher. The good news is that the export of petrol and diesel is increasing faster than the import of crude oil.

Last year, the total export was 65 million tonnes of petrol and diesel, with very good profit margins. In the next few years, India’s domestic refining capacity will go up by 20 per cent and reach above 310 million tonnes. This growth in refining capacity is faster than the domestic requirement growth, meaning more export earnings. The refining capacity expansion happens due to........

© Free Press Journal