Economic growth is a great thing for development. For many nations, an economic boom can lift huge sections of their population out of poverty. The greater the growth rate, the more opportunities those countries will have for development-- though it can be difficult to keep up when a population is growing by 70,000 babies per day. This is the challenge facing India, who must simultaneously manage high levels of economic growth and considerable poverty. Development in India's energy sector will be crucial in achieving this balance.
Apart from a blip during the 2008 global economic crisis, India has maintained a healthy growth rate of near or above 8% since 2003. However, this dropped to nearly 5% in 2012 and has only been increasing incrementally since. In fact, 2017 figures show a decline on the previous year sparking concern in the sub-continent. Despite the ebbs and flows of its economy, India’s population continues to grow unabated.
India’s population broke the 1.3 billion mark in 2014 and is forecast to reach 1.7 billion by 2050. According to the last comprehensive survey by the World Bank, more than one in five Indians lives below the poverty line-- that’s more than 270 million poor people. Despite economic growth the sheer number of poor people is rising. "High growth, though essential," says the India Development Report, "is not sufficient for poverty reduction on a sustainable basis."
The challenge facing India is to raise the standards of living for the poorest Indians, and the answer can only come from more economic growth along with smarter policy and investment. As the population continues to grow, the Indian government must strive to provide all its citizens education, healthcare, housing, infrastructure and, most notably, energy.
“30% of total global increase in energy demand from now to 2040 will come from India,” Petroleum Minister Dharmendra Pradhan stated – more than any other country according to the IEA. Development of India’s energy sector will not only foster greater access to electricity, it will also bring significant foreign investment, generate tax revenues, and create a significant number of jobs, which is key to alleviating poverty.
India has made great strides to attract investment in its energy industry, such as allowing 100% Foreign Direct Investment (FDI) in many segments of the sector, including natural gas, petroleum products, and refineries. The next step is closer collaboration with the world’s largest energy markets, “energy cooperation will be an increasingly key component of bilateral relations,” Minister Pradhan said after a meeting with U.S. Energy Secretary Rick Perry last month.
The focus of the previous administration was for greater renewable energy cooperation with India and at home, but the Trump administration is taking a different stance. President Trump is widely expected to decrease the environmental regulations that have been promoting renewables, encourage U.S. fossil fuel exports, and seems set on withdrawing from the Paris COP 21 Climate Agreement. On cooperation with India, Trump called Prime Minister Modi “a great man,” and promised a close relationship with India. The Trump administration is thus highly expected to give its consent for major exports of Liquefied Natural Gas (LNG) to energy-hungry India, according to a senior U.S. official.
Minister Pradhan attended the CERA Week in Houston to attract investment into India. After unveiling India’s new Hydrocarbon Exploration and Licensing Policy (HELP), the Minister said investors and executives were upbeat about India’s prospects. “All of them consider India as the greatest energy market for the next 25 years.”
Proving it’s not just a one-way street, three Indian public sector companies, GAIL, Oil India and IOC and Reliance have announced investments in U.S. shale gas production. India has also opened doors to energy cooperation with other countries, most notably by signing three Memorandums of Understanding with Russia in October of 2016, promising greater co-operation in the hydrocarbons sector.
This is all good news for job creation, government revenue, and access to power in India. With smart development policies, the Indian government has the opportunity to use progress in the energy sector to improve the lives and expand the basic freedoms of its poorest people through access to affordable and reliable energy.
Ramsay Hall is a geopolitics graduate that combined his interest in the environment and politics for a career in the energy and mining sectors. Providing journalism and analysis, he covers the entire energy spectrum from oil and gas to renewables and smart technology. He has published reports, articles, and features in some of the world’s leading industry journals, including Oil and Gas Investor, Engineering & Mining Journal, and Power Magazine.