By Kanika Saini

Edited by Nandita Singh

India is one of the emerging markets in the world, accelerating in every field due to its central position and its magnificent resources, but it still must face and tackle the dilemma between fossil fuels and renewable energy. Shifting our attention towards the energy sector, we observe that still over 300 million people lack access to electricity and that even the available supply is infrequent and unreliable; moreover, India today is a major contributor to green house gases, but its number are not enough to warrant a comparison with developed nations like China and USA just yet.

India has the 5th largest coal reserves in the world, but still, India faces a formidable challenge in detaching itself from coal; importing coal is a indispensable activity for India due to its heavy dependence on coal for production of about 60% of country’s electricity. Although state controlled coal mines in India produce more than 80% of the coal mined domestically, and we import about 90 million tons a year, still the rise in consumption of coal is further giving rise to increase in demand which is becoming tough situation to meet in long run. Rajendra Pachuri, TERI’s director general said, “It’s a myth that India has a virtually unlimited supply of coal. Much of our coal is so deep that it cannot be mined.” The question however arises, “Where are we lacking?”

           Certain legal issues, inefficiency in Coal India Ltd. (CIL) operations, quality of Indian coal having less energy and more ash content, poor rail infrastructure to connect east producing coal to rest of India etc. might be some of the reasons. Many existing mines are poorly connected, as there is a lack of good rail links to bring coal to where it is needed, as a result the stock piles up in some places while there is shortage in others. However, to develop these railway links means coal producers must work closely with Indian railways as well as state and central governments, which is a complex and daunting task. We know that coal in India is the cheapest fossil fuel, but our increasing consumption might soon increase our coal imports to about 1300 million tons per year by 2030 according to reports issued by TERI.

These avoidable imports add to the current account deficit and the rupees weakness; the weaker the rupee, the more expensive are all import inputs, thus, giving rise to inflation and increasing fuel prices. A fuel price hike ultimately implies that electricity prices also rise, and thus, such imports become one of the reasons of macroeconomic instability.

Being in a sunny tropical belt, India could greatly benefit from renewable energy as it has the ideal combination of high solar radiation and a huge consumer density. Modi’s government mantra “Make in India,” with the aim of encouraging and making a low carbon economy is taking its shape; solar power will soon prove to be a tool to deliver growth potential as it can add 10,000 MW a year (of solar energy).  Thus, solar energy might prove to be cheapest form of electricity in India, providing a cleaner alternative to coal. Although India is on a path of a renewable revolution, it is important that state owned electricity units actually buy into it. Tamil Nadu houses about 40% of the country’s installed capacity for wind power. It is actually less expensive than coal power, but many state owned electricity companies don’t buy it because of a fear of the rise and fall of winds, which they the lack ability to forecast.

Kanika Saini is currently carrying out with her economics honors degree from a renowned institute of India, lady shri ram college for women.she is from gurgaon and did her schooling from “summer fields school “.she has been working in NGO as a volunteer for a year at “Indian cancer society”.she  volunteered at various cancer institutes including AIMS ,prashanti cancer centre etc.she also did  street plays on awarness of breast cancer at medanta hospital ,gurgaon. She is currently working as a HR intern in marketing department of a travel agency “made to travel”.she is now a part of  a prestigious “the economics times” columnist program,as a intern.

Posted by The Indian Economist | For the Curious Mind