Fitch Solutions, an arm of prestigious Fitch ratings has predicted that a victory of Congress led UPA will bring ‘uncertainty’ in the oil and gas sector of India. “A win for the main opposition the United Progressive Alliance (UPA) could bring considerable uncertainty to India’s policy-making environment and see the progress of oil and gas reforms continue to disappoint going forward, although this is not our core view,” said a note by Fitch Solutions. Under Modi government India’s track record in energy sector has been very good in terms of policy initiatives to achieve self-reliance.
PM has pledged to reduce the crude oil imports by 10 percent from the existing 82 percent of the total demand. “Another prominent objective of Modi has been to increase access to and consumption of clean energy such as natural gas and renewables, and policies on this front are likely to gain greater traction over the coming years, as India strives to cut air pollution and curb coal use,” said the report. “The Prime Minister’s strong commitment to meeting the national clean energy targets supports our bullish forecasts for gas demand to average annual growth of 7 per cent over his projected second term in office. Indeed, gas is only a small component of the total energy mix at 6.5 per cent and 6 per cent of the power mix, indicating sufficient room for further incremental growth,” it added.
As per IEA’s Global Energy & CO2 status report, the primary energy demand in India outpaced the global average last year. The energy demand in 2018 rose by 4 percent in India against 2.3 percent, which was the global average. China, US and India accounted for almost 70 percent of rise in energy demand. The global energy demand was fuelled by a 3.7 percent GDP growth in the global economy against the average growth of 3.5 percent around 2010. CO2 emissions rose by 1.7 percent and hit a new record. The extreme weather conditions around the globe fuelled the demand for electricity which grew at the pace of 4 percent.
The rise in energy demand in India is due to good growth of the Indian economy. India is the fastest growing major economy in the world and posted higher growth than China in the last few years. The energy demand growth in the country also surpassed that of China’s this year. However, coal is still the primary source of energy in the country accounting for more than 40 percent of total energy demand. India is the third largest consumer of energy after China (3,155 Mtoe) and the United States (2,227 Mtoe). The per capita energy consumption in India is very low and it will rise with the growth of the economy. India will need to find alternatives to fossil fuels to supply its growing energy demand.
The previous UPA government has been known for the policy uncertainty and poor execution. The policy paralysis of UPA government hurt the Indian economy and the country became a member of fragile five in early 2010s. If UPA comes back to power, Indian economy will be back in the weak condition UPA left it in.