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India needs to act fast in key areas like phasing-out of fuel subsidies, reduction in state electricity board?s commercial losses and investment in energy and power infrastructure if it has to speed up its economic growth momentum.

India needs to act fast in key areas like phasing-out of fuel subsidies, reduction in state electricity board?s commercial losses and investment in energy and power infrastructure if it has to speed up its economic growth momentum. The current climate of policy complacency on the energy front is not conducive to the country?s long-term growth objective.

Despite being heavily dependent on imports for meeting its petroleum products requirements, natural gas and coal, the country is subsidising its energy consumption in a big way.

For example, the under-recovery of oil marketing companies on the retail sales of motor and cooking fuels in 2011-12 is estimated at R1.38 lakh crore. During the same period, state electricity boards (SEBs) are estimated to have lost R80,000 crore due to non-revision of electricity tariff. That takes India?s energy sector subsidy to well over R2 lakh crore a year.

The government is formulating a national manufacturing policy to increase the share of manufacturing in the overall GDP to 25% by 2022 from the existing 16%. However, energy is going to play a very crucial role in the future competitiveness of the manufacturing sector, according to a study titled ?The Future of Manufacturing: Opportunities to Drive Economic Growth,? prepared by the World Economic Forum in collaboration with Deloitte India.

The WEF report, which was released recently, says: ?All nations will seek competitive energy policies that ensure affordable and reliable energy supply for all manufacturing sectors and will be forced to seek new ways of manufacturing, from energy-efficient product designs to energy-efficient operations and logistics.?

India faces two mutually conflicting challenges?that is, energy security and low emissions?in maintaining its high economic growth over the long run. It can ill-afford to compromise on its growth imperative given that it has to provide jobs to millions who join its workforce every year. But at the same time, it cannot afford to ignore its responsibility to reduce emissions and fight climate change.

India is relying on its energy efficiency programmes to reduce its energy intensity. But a recent report from consulting firm PWC has found that global energy intensity is rising again after 20 years. ?Despite the priority given to energy efficiency programmes in policy initiatives, global energy intensity has begun to increase for the first time in more than 20 years,? according to the 12th PWC Annual Global Power and Utilities Survey, which says: ?An important factor in promoting energy efficiency is the phasing-out of fossil fuel subsidies.?

?Tracking Clean Energy Progress,? a recent publication from the International Energy Agency, an energy advisor to the developed world, goes even a step further by saying the cost of energy should reflect the ?true cost? of energy?accounting for the positive and negative impacts of energy production and consumption. It has argued for levelling the playing field for clean energy technologies.

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First published on: 30-04-2012 at 01:46 IST
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