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Demand for power in India surges higher, defying the growth slowdown
Published by Gbaf News
Posted on September 5, 2019
3 min readLast updated: February 21, 2025
Global Banking and Finance Review
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Published by Gbaf News
Posted on September 5, 2019
3 min readLast updated: February 21, 2025
Demand for electricity in India has suddenly seen a 7% growth despite the floundering economic expansion touching its lowest in six years. The demand appears to be inconsistent considering the current economic status of the nation. However, there seems to be a hidden cause, genuine enough to witness the surge.
Several industrialized states lowered their demand for power during the phase from April to July this year. The results can be tracked to the overall decrease in the Asian economy as businesses too lowered their demand for power.
However, a close observation pictures the overall increase in demand for power is probably due to the steep increase in the number of households in several states. If observed carefully, Uttar Pradesh, currently the most populous state in India, alone saw an increase in demand for power by a whopping 9%. Rajasthan surpassed Uttar Pradesh and increased its demand for electricity by a mammoth 11%. All this drastic increase in demand for power took place during the four-month period.
However, states considered important automotive hubs and manufacturing centres decreased their demand for electricity. Tamil Nadu witnessed a slight increase in demand by 2.7% while Maharashtra soared by only 1.4%.
A weak 2.9% increase took place in Haryana while Gujarat demanded only 5.3%. This is much lower compared to the figures last year like 7.5% and 8.8% respectively.
The automotive industry in the nation was the worst hit by the decline in demand for power. Several automakers had to forcefully cut down their manpower and shut plants for a temporary period of time to manage their inventories. The dire effect was the direct consequences of an extended slowdown in domestic consumption. India witnessed a deep slump in car sales in July 2019, the worst ever collapse in the last two decades.
A recent expansion of GDP by 5%, the slowest since March 2013 did not help the cause and only made matters worse. The chief economic adviser in the finance ministry, Krishnamurthy Subramanian stressed the importance to focus on power demand growth if the Indian economy needs to scale to a healthy position in the near future. The increase in GDP indicates some positive signal aiming for a higher growth rate soon.
One way to combat the situation and revive the Indian Economy and electricity distributors is to increase the demand for power from factories and commercial firms. It can surely create a sea of difference to the economy since factories and commercial firms sum up to nearly half the consumption of power who also have the capacity to pay more.
Apparently, their positive act can also help subsidize poor households and farmers who depend on electricity for their livelihood. Prime Minister Narendra Modi’s promise to supply power to every home can only bear fruit when businesses purchase more electricity.
The decrease in the consumption of diesel, powering performance in several industries, clearly indicates the decrease for power in factories. Diesel consumption rose by only 2.4% in the four-month period, as reported by the nation’s Petroleum Planning & Analysis Cell.
All the above factors, particularly a collapse in automobile sales and the delay in operations in new private sector projects have greatly contributed to the slump in demand and consumption for diesel in what is considered the world’s fastest-growing fuel market.
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