Today marks 100 days in office for India's Prime Minister Narendra Modi and the Bharatiya Janata Party after winning the 2014 national elections in May. The new government – India's first majority admistration since 1984 - inherited a number of challenges, including a slowing economy and weakening energy demand growth. Wood Mackenzie reflects on progress to date as Prime Minister Modi works towards campaign-winning promises of GDP growth of 8% by 2017 and solving the many problems that plague the country’s energy industries.

State of play when Modi took office

•    When Prime Minister Narendra Modi and his Bharatiya Janata Party won a majority government in May this year, they inherited structural problems in the energy sector and slowing economy. On the campaign trail, Modi pitched a reform agenda, and promised to restore growth to India.
•    In recent years, India’s growth in per capita energy demand has stagnated – a disappointing trend in a country where a sizeable proportion of the population has limited access to anything but traditional fuels.

Over the first 100 days, some progress has been made

•    Control of India's coal, power, mining and renewables industries has been consolidated, which should help to accelerate reform. A Presidential speech in July contained a strong energy component, and the Prime Minister has emphasised the need to reinvigorate India’s manufacturing sector, restart stalled infrastructure projects, and build a new generation of ‘smart cities.’ All of these ambitions imply robust energy demand growth.
•    There are some concerns that the government is not capitalising on its mandate for change, and is instead pursuing gradual rather than radical reform. Progress to date suggests the government's priorities are weighted towards maintaining stability, rather than taking decisive steps in areas such as energy subsidies.
•    Nevertheless, the government's aims are ambitious, and if reached, would imply a dramatic upside to India’s long-term energy demand. In his previous role as Chief Minister of Gujarat State, one of Modi’s key achievements was the provision of reliable electricity supply. Modi plans to deliver this for India as a whole. If this were achieved, the country would need 500 terrawatt hours (TWh) of additional power supply by 2030 – approximately the total electricity demand of South Korea in 2010.

Energy may not be the new government's main priority, but in a country where the working age population will swell by 200 million people over the next fifteen years, population size is the key risk to India’s long term energy demand. Small changes to metrics such as electricity demand per capita could have a huge aggregate effect. Wood Mackenzie believes that if successful reform can be delivered, an enormous upside demand impact could be the result.
Source:Wood Mackenzie