INDIAS ECONOMIC

GROWTH, Energy
SCENARIOS AND
CLIMATE CHANGE
S L RAO
at
University of Alberta

OVERVIEW

In 2004 India was shining; then government lost elections, using that slogan

Economic fundamentals-real economy-erratic industry and weak Agriculture,

poor infrastructure, excessive subsidies, poor social security administrative
incapability to spend efficiently on any programmes, high deficits, volatile
foreign funds

Global meltdown of 2008-layoffs and slower growth in 2008, 2009

Vast domestic market, huge potential market of the Poor, young and ambitious
population, immense technological and managerial capability

Large part of population not served by commercial energy

Major fuel is and will be Coal

Indias exemplary energy efficiency and emissions record

The Past Ten Years And Now

GDP growth: From 1998-99-6.5, 6.1, 4.4, 5.8, 4.0, 8.5, 7.5, 9.5,
9.7*; 2008-09 7.1%? New year-5%?

Industrial production negative growth Dec 08, Jan 09.

High and Rising Savings rate

Rise in Capital formation Esp. Private Sector

Deepening Export

Inflation at single digit for a decade; 7.7% last year, 4.2 in Dec
2005; despite fuel, power, light & lubricants at 7.1; from 03-04-8.1,
03-04-9.8); Rising in 2007-08, Nov 2008- 7.8%; Now almost zero

Export growth trends; 01-02 onwards: 22.1, 15.0, 21.4, 27.6 & in
08-09 now drop of 20%

Rapid growth of I.T. and B.P.O.

Resilience: Survived face-off with USA and sanctions after nuclear

explosions
3

India- A Fast Growing Economy

with Greater Potential

Mobile Users - 362.2 million (Jan 2009); 101.1 Million new mobile
users in last 10 months; growth continues

Internet connectivity in 2010 -200 million; still growing

5.25 mn broadband connections (Dec 2008); growing

5.4 million PCs sold in 2006; slowing down

Cars: expected 30% growth p.a.; Will rise again with NANO

2010-over 94 mn cable & satellite households

Advertising industry at Rs4000 crores=$800 million

Slow down in Retailing; Special Economic Zones, Media

Agriculture 20% of GDP, poor productivity, declining public

investment, too many poorly targeted subsidies;

Weak Infrastructure-Power, Roads, etc

Social infrastructure-Health, Education, etc

Poor Delivery systems

4

Demographic Dividend
2004-Population =1080 million of which
Age between 15 and 64=672 million
Below 15 and over 64, non-working or dependent
population=408 million
Dependency ratio of 0.6; 2030-0.4
2020 Average Age: India-29; China-37; Japan-48:
youngest working age population in world
Less children=more women at work; more saving;
greater growth

2009 - Macro Economy Indicators

Falling GDP growth forecasts; 2009-10- 5%?; revival in 2010

BOP current a/c deficit widening again; also Trade deficit doubled despite fall
in crude prices; last year due Oil imports bills, now export & foreign
investment decline

Predicted Layoffs by year end-10 million

Corporate performance under pressure but margins ok: FY 99 4.08%; Rising

from FY 03 5.32, then 7.48, 9,24, 8,73, 9.84, 10.01 (FY 08), 8.54;

Rising crude and gas costs hurt economy; but falling prices coincided with
recession

To reemphasize local and cheaper energy inputs: local coal, local gas, hydro,
nuclear, renewables, renewables

Climate Change and New Coal Technologies, ownership and investment

issues

India is in a squeeze-economic growth imperative-fuel cost rising-emissions

Weak Agriculture

Supports 60% of population

Agriculture was 32% of GDP in 92-93; 17% in 2008-09 (AE)

Agriculture growth or decline has direct effect on GDP; 97 GDP +

7.8% Agriculture +8.8; 04- 8.5 & A-9,3

Static rice, erratic wheat, production:

08 07 06 05 00 91 81 (mn t)

R 96 93 92 83 85 74 54

W 78 76 69 69 70 55 36

Land availability limited: Since 1980 crop area for food grains static
at around 124 mn hectares

Total Investment in Agriculture falling in 1990s as % to GDP from

1.92 in 90-91; 1.83 in 99-00; 2006-07- 2.3 %

Weak Agriculture-2

Fall is in public investment; private keeps rising; funds for public

investment diverted to poorly targeted subsidies(water, power,
fertilizer)

Productivity levels are low: Yield @ 100kg/HA; India and China in

2006: paddy 31.24 & 62.65; wheat 26.19 & 44.55; cotton 6.0 & 33.3;
g.nut 8.6 & 31.2, s.cane 669.4 &825.25

Poor policies encouraging unsuitable crops: free electricity; minimum

support and procurement prices same; annual price increases; no
ground water policy; free power to agriculture60% population lives
on agriculture

In downturn, companies turning to rural markets, with new Marketing

methods

Huge potential as diversification progresses

Weak Infrastructure
Non-implementation of integrated energy policy;
no coordination between electricity, coal and gas
Government ownership of Electricity distribution,
coal
Government implementation poor on Roads
Infrastructure regulation/implementation awaiting
overhaul
State ownership- high inefficiency, slow decisionmaking, corruption, delays
Federal Constitution; states at loggerheads with
Centre; need for coordination
9

Trends of Human Development Indicators

in India from
1951 to 1999-2003
Trends of Human Development Indicators
160

1951
1961

146

1971

140

1981

120

1991
1996

100

1999-2003

80
62.7
60
40

32.1

64.8

58

27.4
18.3

20

7.6

Life Expectancy at birth

(Years)

Death Rate

Infant Mortality Rate

Literacy Rate (%)

10

HDI indicators
Improvement on all fronts; others have fared much better
HDI Rank out of 174; Sri Lanka 89; China 96; Indonesia 110; India
124; Pakistan 148
India: +60 population in millions-2001-6.3%=65; 2016-8.9%=113

-Age 15-59 2001-598mn; 2016-811mn

-Urbanization: 2001-27.8%; 2030-50%?
-Issues: Livelihoods, health, education, housing, water,
roads, sanitation, social security, law and order
Poor public health and important reason for low HDI

11

Current Economic Crisis:

Not just an imported phenomenon
1.

Rising deficits-not shown by Centre in Budgets-Oil Bonds, FCI

bonds, Fertilizer bonds, Farmer Loan write-offs, etc

2.

Putting Growth over inflation control

3.

Desperation to add to Foreign Exchange Reserves

4.

Participatory Notes and round-tripping of Indian funds

Exemption from short-term capital gains tax; Mauritius

as largest foreign investor; Very volatile FII funds-stock
market like yo-yo as funds ebbed and flowed

Power shortages; many not connected

12

Liquidity and Falling Rupee

Banking meltdown in USA worsened situation

FIIs, foreign banks withdrew to support liquidity in

their HQ

Stock markets collapsed-SENSEX from 21000 to

almost 8000

Rupee collapsed-in 11 months from Rs 38 to $ to Rs 50

Overseas borrowing marked to market-upset balance

sheets of Indian companies and

P & L as interest costs shown in Rupees

Energy investment affected adversely

13

Poor ImplementationLack of basic Administrative Reform

Government has been very inefficient in its

subsidies than asset building

Similarly Public Distribution System-e.g. food grains, sugar,

edible oils, cheap kerosene;

Other subsidies poorly targeted, physical handling

inefficiencies-fertilizers, free or cheap power to agriculture;

Social Programmes- NHRM, SSA-not efficient in spending

honestly. NREG should have added to purchasing power but with
estimates ranging from 40 % to 60% wasted and leakage, its
effect has been reduced.

Unspent funds in most programmes

Infrastructure spending is also slow, eg., NHAI.

Many projects delayed due too many Ministries, lack of

coordination, non-accountability of bureaucracy

expenditures; more

and

14

Indias Potential
1.

Worlds Largest Pool of Trained Manpower:

200 million college graduates (~16%)

500 million trained, skilled workforce (~40%)

Universal Literacy

2.

Worlds Leaders in Industry and Commerce

30 of Fortune

100 from India

3.

India Accounts for 10 % of World Trade

A broad scope of products and services

4.

India as a Source of Global Innovations New Businesses,

New Forms of Organization, New Technologies
15

Indias Potential
5.

6.

7.

Focus on the Bottom of the Pyramid as a

Source of Innovations for the World
(Leaders in Health, Education, Energy,
Sustainable Development for all)
Markets

Transportation,

A Flowering of Art, Literature, Films and Science

( 10 Nobel Prize Winners from India)
A New Moral Voice for People Around the World India as a
country where Universality and Inclusiveness is widely
practiced. India becomes the most Benchmarked country
for its
capacity to accept and benefit from its diversity

TO IMPROVE LIFE OF MANY, & ACHIEVE ITS POTENTIAL, INDIA NEEDS

CONSISTENT HIGH ECONOMIC GROWTH AND ENERGY SUPPLIES

16

Energy Consumption
India has lowest energy consumption
today
Even with 8% annual growth till 2030 India
will not catch up with most others
Coal will be the most important energy
source
With lower calorific content, electricity
using Indian coal will be much more
17

Per capita Energy consumption

by Countries
TPES
(kgoe)

India 2003-04

439

Electricity
Consumption
(kwh)
553

Oil
(kgoe)

111

Gas
(Cu.m.)

Coal
(Kg)

Nuclear
(kWh)

Hydro
(kWh)

30

257*
(375)

16

69

256

273

India 2031-32
(projected @ 8%
GDP growth)**

1250

2471

331

149

925*
(1388)

World Average
(2003)

1688

2429

635

538

740

403

423

OECD (2003)

4668

8044

2099

1144

1651

1924

1076

U.S.A. (2003)

7840

13066

3426

2176

3410

2624

948

China (2003)

1090

1379

213

32

1073

32

215

South Korea (2003)

4272

7007

2264

627

1541

2570

101

Japan (2003)

4056

7816

2146

845

1247

1859

816

* Per Capita coal consumption of India has been estimated based on the calorific value of hard coal used internationally (6000 kcal/kg) to maintain
uniformity. The figures in brackets are the actual per capita consumption based on Indian coal with a calorific value of 4000 kcal/kg.
Source: Integrated Energy Policy : Report of the Expert Committee Pg No 32

18

India has low CO2 emissions

(CO2 equivalent emissions-mmt)
1990

2000

CAGR %

Russia

3208

1833

-3

Germany

1246

1019

-2

U.K.

738

640

-1

Japan

1103

1297

USA

5080

6209

India

988

1485

China

3837

4820

Brazil

1180

1477

6
19

in Energy Supply &

Infrastructure
Investment
(billion dollars)

2001-2010

2011-2020

2021-2030

2001-2030

Total Currency
Investment

172

247

347

766

Source: International Energy Agency

20

Indias Energy Mix Over

Time (%)
Nuclear
0%
Hydro
8%

Nuclear
Hydro 1%
5%

Oil
24%

Oil
31%
Gas
0%

Coal
55%

Coal
68%
1965

Gas
8%

2001

21

Constraints
With just 4% of global GHG emissions, India under pressure to curb
fossil fuel consumption
India must find ways to decouple growth in GDP and fossil fuel for
energy, but ensure universal lifeline access
Primary Energy in million tonnes 2005-06
Oil equivalent
513
1887
Of which, Non-commercial
28%
Coal
38%
Oil & Gas
8%
Hydro & Nuclear
26%

2031 -32
1536 to

22

The Burden of Traditional Fuels in Rural India

Study based on an integrated survey of 15,293 rural households from 148 villages in three
states of rural North India and one state in South India. Symptoms of diseases related to air
and water pollution, expenditure on health and person days lost, demographic and socioeconomic information, measurements of air quality in the kitchen, outside the kitchen and the
home were collected. Indicators for respiratory functions (Peak Expiratory Flow) were
measured for most adults present. The doctors examined a sub-sample of individuals for
confirmation of diseases.
The study estimated that

96% of households use biomass energy, 11% use kerosene and 5% use LPG for cooking.
Most of them use multiple fuels.
Forests contribute 39 % of the fuel wood need.
314 Mt of bio-fuels are gathered annually.
85 million households spend 30 billion hours annually in fuel wood gathering.
Respiratory symptoms are prevalent among 24 million adults of which 17 million have
serious symptoms.
5% of adults suffer from Bronchial asthma, 16% from Bronchitis, 8.2% from Pulmonary TB
and 7% from Chest infection.
Risk of contracting respiratory diseases and eye diseases increase with longer duration of
use of bio-fuels.

Total economic burden of dirty biomass fuel estimated at Rs.299 billion ($7.5 bn) using a wage
rate of Rs.60 per day, comprising of opportunity cost of gathering fuel, working days lost due
to eye infections and respiratory diseases, and the cost of medicine.
As women are the primary sufferers of the adverse impact of use of biomas fuels, there is a
close linkage between gender and energy. Gender and energy issues have remained on the
periphery of energy policy, and require greater attention and backing.
Source: Parikh Jyoti et al (2005)2
Integrated Energy Policy: Report of the Expert Committee Pg No7

23

Rural Household Energy Consumption

mainly firewood and dung in rural,
electricity in urban
July 1999-June 2000
Fuel Type

Physical Units

Mtoe

Rural

Urban

Total

Rural

Urban

Total

Fire Wood & Chips (Mt)

158.87

18.08

176.95

71.49

8.13

79.62

Electricity (Bk Wh)

40.76

57.26

98.02

3.51

4.92

8.43

Dung Cake (Mt)

132.95

8.03

140.98

27.92

1.69

29.61

Kerosene (ML)

7.38

4.51

11.89

6.25

3.82

10.07

Coal (Mt)

1.20

1.54

2.74

0.49

0.63

1.12

L.P.G. (Mt)

1.25

4.43

5.68

1.41

5.00

6.41

Source: Derived from NSS 55th Round, (July 1999-June 2000) data, National Sample Survey Organisation, Ministry of Statistics and
Programme Implementation, Government of India

Integrated Energy Policy : Report of the Expert Committee Pg No 8

24

Commercial Energy Requirements (One

Scenario-Coal dominates; oil next; gas could
rise)
Coal
Year

Hydro

Nuclear

Oil

Natural Gas

TPCES

8%

9%

8%

9%

8%

9%

8%

9%

2011-12

12

17

257

283

166

186

44

48

496

546

2016-17

18

31

338

375

214

241

64

74

665

739

2021-22

23

45

464

521

278

311

97

111

907

1011

2026-27

29

71

622

706

365

410

135

162

1222

1378

2031-32

35

98

835

937

486

548

197

240

1651

1858

CAGR -%
(Compounded
Annual Growth
Rates)

5.9

11.2

5.9

6.3

5.1

5.6

7.2

6.4

Per Capita
consumption In
2032 (Kgoe)

24

67

569

638

331

373

134

163

1124

1266

In 2004 (Kgoe)

6.5

4.6

157

157

111

111

27

27

306

306

Ratio 2032/2004

3.7

14.6

3.6

4.1

2.9

3.4

5.2

6.3

3.7

4.1

Source: Integrated Energy Policy : Report of the Expert Committee Pg No 28

25

Model ResultsCommercial energy requirements

BAU-from 391 MTOE in 06-07 to 2123 in 2031-32,
of which coal rises from 193 to 1176
Hybrid-from 391 to 1503 in 2031-32 with coal from
193 to 767
Energy intensity in BAU scenario falls from 0.022
kgoe per Rupee of GDP in 2001 to 0.017 in 2031 fall
of 23%
In Hybrid-from 0.022 to 0.012, fall of 29%

26

Projected Commercial Primary Energy Requirements

Projections for Electricity Requirements (Based on Falling Elasticities )
Total Energy
Requirement

Energy Required at
Bus Bar

@ GDP Growth Rate

@ GDP
Growth Rate

@ GDP Growth
Rate

@ GDP
Growth
Rate

8%

9%

8%

9%

8%

9%

8%

9%

2003-04

633

633

592

592

89

89

131

131

2006-07

761

774

712

724

107

109

153

155

2011-12

1097

1167

1026

1091

158

168

220

233

2016-17

1524

1687

1425

1577

226

250

306

337

2021-22

2118

2438

1980

2280

323

372

425

488

2026-27

2866

3423

2680

3201

437

522

575

685

2031-32

3880

4806

3628

4493

592

733

778

960

Note: Electricity generation and peak demand in 2003-04 is the total of utilities and non-utilities above 1 MW size. Energy demand at bus bar is
estimated assuming 6.5% auxiliary consumption. Peak demand is estimated assuming system load factor of 76% up to 2010, 74% for 2011-12 to
2015-16, 72% for 2016-17 to 2020-21 and 70% for 2021-22 and beyond. The installed capacity has been estimated keeping the ratio between total
installed capacity and total energy required constant at the 2003-04 level. This assumes optimal utilization of resources bringing down the ratio
between installed capacity required to peak demand from 1.47 in 2003-04 to 1.31 in 2031-32. Integrated Energy Policy : Report of the Expert
Committee Pg No 20

27

Energy efficiency
Ratio of Total Primary energy Consumption to GDP in
PPP terms-2005:
India 0.15;China 0.22;USA 0.21; Russia 0.47
India has shown in 2001-06 least energy consumption
growth to GDP growth: Av GDP +8% p.a. & 3.7% annual
energy consumption growth
Indias population 3,5 times USA and 3 times EU20, but
GDP growth is double with lower absolute incremental
consumption of fossil fuels
China grew faster on incremental basis; but in absolute
terms, since 2002, it consumed over 9 times fossil fuel
compared to EU20, 10 times of USA, and 11 times India
India has achieved this result by denying modern
commercial fuels to over half its population

28

Energy Efficiency must improve

further in India
Indian energy intensity is =Japan & Brazil
Below U.K. at 0.14, Denmark-0.12
India can improve energy efficiency by at least 20%
based on currently available technologies
Can improve especially in some industries, buildings,
transport,

29

Maximum values of domestic coal

availability-not enough for needs
Fuel (MT)
Coking coal
Non-coking coal
Lignite

2001/02

2036/37

27

50

299

550

25

50

MT - million tonnes

30

Estimates of bio-diesel production

Year

Area under plantation

(%)

Bi--diesel
(million tonnes)

2006

0.0

2011

2.0

2016

10

3.9

2021

25

9.8

2026

70

27.5

2031

90

31.9

2036

100

35.4

Source: National Energy Map for India: Technology Vision 2030: Pg.No. 57

31

Renewable energy source potential

Source/technology

Unit

Biogas plants

Million

Biomass-based power

MW

Efficient wood stoves

Million

Solar energy

MW/km2

Small hydro

Potential/
availability

Potential
exploited

12

3.22

19500

384.00

120

33.86

20

1.74

MW

15000

1398.00

Wind energy

MW

45000

1367.00

Energy recovery from

wastes

MW

1700

16.20
32

Other Efficiency Measures & Sources

-POWER

Clean Coal can double life of coal from present 40-45 years from
conventional mining
Coal bed methane can double gas reserves
Circulating Fluidized Bed Combustion (CFBC) technology enhances
options with low quality Indian coal and lignite
Integrated Gasification Combined Cycle technology (IGCC) with
imported coal can raise consumption efficiencies
Nuclear energy
Expanded Hydrocarbon supply options in India and overseas
Integrated renewable energy policy
Solar cells in arid lands, deserts, mountaintops, home & vehicle
roofs
Market reforms-subsidies, free energy, efficiency of generation,
distributed power

33

CO2 Emissions Profile

(In million tonnes)
Scenario

2001

2011

2021

2031

BAU

917

1663

3332

7267

Hybrid

917

1479

2443

4774

Sector in
2031

BAU

HYB

Power

2879

1329

Industry

2830

2510

Transport

1377

759

181

176

7267

4774

Others
Total

34

Barriers to GHG Mitigation

POWER
High upfront capital cost per MW of Power &
hence tariffs, cross-subsidies
Lack of experience and technical know-how
in advance power generation technologies
IGCC not demonstrated commercially for high
ash Indian coal
Lack of funds with states for R & M
Renewables-high generation cost

35

Barriers to GHG Mitigation

INDUSTRY
Cement, iron & steel, petrochemicals, other
chemicals improved
Pulp & Paper, Textiles, Fertilizers, etc,
behind
SMEs-credit & capital constraints

36

Barriers to GHG Mitigation

TRANSPORT
Need for tough regulatory standards-e,g, fuel
economy on auto manufacturers
Huge investments required
MRTS- divert resources from other priorities;
& no door-to door connectivity
Need to change lifestyles and individual
preferences

37

Regulatory Aspects of GHG Mitigation

EXISTING: Programmes for energy efficiency in industry,
appliances, buildings, municipalities
UMPP-supercritical boilers
Created Bureau of Energy Efficiency
Notified norms for vehicle exhaust emissions from 2010
Minimum 10% by 2012 of total energy sales as R.E.
REQUIRED: Trading in certified energy savings in excess of
mandated savings
Incentives for Energy efficiency-e.g., differential taxation on
certified energy efficient appliances
Financing of energy efficiency through public private
partnerships
38

Suggested Technology Deployment Programme

2006-11

2011-21

Power generation technologies

Hydro power generation

2021-31

Commercialize IGCC

Supercritical boilers/ulta-supercritical
boilers

Demonstration of commercial of
commercial scale thorium based
reactors demonstrated

Ultra-supercritical boiler to be commercialized

Advanced gas turbines (for example, Hframe Turbine)

Refinery-residue-based IGCC

Demonstration of commercial scale IGCC

plants using indigenous and imported coals

Fast breeder nuclear reactor

State-of-the-art industrial processes to be

adopted

State-of-the-art industrial
processes to be adopted

End-use technologies
Cogeneration
Use of waste recovery in industrial
processes

Lighting technologies: CFL, LED

Energy-efficient white goods refrigerators,

alternating current

T & D loss reduction: HVDC, HVAC, and

amorphous Core transformer

Natural gas from gas hydrates

In-situ coal gasification to be

commercialized

Natural gas from from gas

hydrates to be commercialized

In-situ coal gasification

Deep-sea natural gas commercially

available

R & D in exploration and production of fuels

Deep-sea natural gas

CBM

CBM production to be commercialized

CBM cool
bed methane:
CFL greater
compact than
fluorescent
LED light emitting
Mining
of cool
from seams
300 lamp,
Commercial
miningdiode;
of coal from seams

HVDC high voltage direct current; HVAC high voltage alternating current;
Source: National Energy Map for India: Technology
metres
greater
than
300
metres
IGCC integrated glasification combined cycle; T & D transmission and distribution
Vision 2030: Pg.No. 201
R & D research and development

39

THANK YOU

40