Introduction

India is one of the largest consumers of energy in the world. India’s energy consumption has
almost doubled since 2000. There are various factors that are responsible for this increase like
rising household income, increasing urban population, etc. The rising urban population has
led to rise in the demand of energy and the rising household income also supports this rising
demand of energy. India has almost reached universal access to electricity through the mass
electrification efforts in the past two decades only.

In spite of the being the major consumer of energy in world, the per capita consumption of
energy in India is about half to the average per capita consumption of world. This means that
the large consumption is a result of large population and not due to heavy usage by
individuals. But with the rising income and urbanization, there has been increase in demand
of luxury products like air conditioners, refrigerators, etc. which would eventually lead to
rise in demand and consumption of energy in India. The Covid-19 pandemic has hit
negatively, both the demand and investment in the energy sector of India. However, when the
economic activities will pace up in future, the energy demand will again rise in India and thus
the investment will also rise.
India is heavily dependent on conventional and non-renewable sources for its energy
requirements. Coal, oil and solid biomass are the fuels which caters to almost 80% of India’s
energy needs. Due to the increasing household income, there has been rise in vehicles and
automobiles which are dependent on oils for its energy requirements. India is heavily
dependent on imports for oils which makes the energy sector of India import dependent.

From the above figure, we can see the import dependence of India on different for countries
for fuel and energy. This heavy dependence on imports has negative impacts on the
macroeconomy of the country like balance of payment crisis, trade deficits, current account
deficits, etc. The rising urban population and household income will give rise to demand and
consumption of energy. As per World Resources Institute, India’s projected energy demand
are given in the figure below.

Thus there is rising challenge in India to look for alternative renewable sources of energy and
also look for ways to conserve energy. This would help the country to ensure energy self-
sufficiency and not dependent on any foreign country for its energy needs.
References

IEA (2021), India Energy Outlook 2021, IEA, Paris https://www.iea.org/reports/india-

energy-outlook-2021