Journal of Regional Development and Planning, Vol. 1, No.

1, 2012

51

INDIAS ENERGY IMPERATIVES: MACRO AND REGIONAL DIMENSIONS Kalyan Mukherjee1

Energy has a significant influence on the process of development in modern times. Accessibility to affordable and reliable energy is a must for production process and is indispensible for maintaining the growth momentum of an economy. The present paper focuses on the current and future energy demand scenario with special reference to India. Focusing on the importance of energy for development, the paper starts with a discussion on global energy outlook with special reference to Asia and two of its fastest emerging nations; India & China. Starting from a macro point of view with the analysis of demand for energy across different regions of the world, the paper has made a micro level discussion on energy imperatives for the Indian economy and also the impact of energy situation on regional development. Sectoral energy scenario has been discussed in detail so as to give some insights to the policymakers for future.

INTRODUCTION Energy acts as a crucial ingredient for the development of an economy. Accessibility to affordable and reliable energy services is the essential ingredient of economic development. Modern energy services are mainly provided by liquid fuels, gaseous fuels and electricity. These are very essential in developing infrastructure along with maintaining growth momentum of an economy so as to ensure development defines as growth along with some structural changes. With increase in economic activity the demand for energy increases or in other words, there is a direct proportional relationship between demand for energy and economic activity leading to the growth of an economy. However, Pattern of energy usage changes with stages of development. Starting from the initial days of the society, energy used to come from biological sources like wood. In the next stage the emergence of processed bio fuel, commercial fossil energy and animal power has played an important role in developing the economy. Now a day, being in the most advanced stage of socio economic development, the energy usage pattern has been shifted to electricity, indicating increasing dependence on energy to ensure growth as well as development of a country. Traditionally, the economists recognize land, labour and capital as the only factors of production. Emergence of the concept of industrial development has recognized energy as the fourth factor of production. Industrialization and economic development of a nation requires substantial flow of energy at an affordable cost. Hence, Energy is a kind of pre requisite for development of a nation. This seems to be more prominent for developing and underdeveloped economies. Per capita usage of energy in such economies is very low as compared to that of developed economies, representative of the fact that the productivity comes in lieu of energy consumption and high productivity is the basic indicator of a countrys progress. Developing or emerging economies in the world basically faces three kind of problems First is to meet the need of millions of people who still lacks basic energy service i.e. electricity, Second is to meet the growing energy demand to facilitate economic growth in terms of rapid industrialization and infrastructural development and the third one is the high level of emission from developing countries resulting in
1

Delhi based Consultant. Views expressed are personal of the author. Correspondence: onibon@gmail.com

52

JOURNAL OF REGIONAL DEVELOPMENT AND PLANNING

environmental problems leading to health hazard among people. The third point is significant in the context of sustainable development; poor health of the people caused by environmental pollution will ultimately slowdown the economic growth as health is not only the absence of sickness, good health enhances better productivity among adults and enables child to acquire skills to be utilized in future. Development to be sustainable the emission level is also to be kept in mind. Keeping this threefold challenges in mind the paper mainly focuses on the importance of energy in the development of an economy by way of an analytical discussion on growing energy demand across all countries of the world with special reference to India. In context of India, as a developing nation, regional disparity in availability of energy is also discussed with the conceptualization of growth-energy interlinkage. In this paper we explore the energy imperatives for India in the coming years, both from the macro and the regional perspective, and identify the areas that requires focus to ensure energy security and energy stability. In addition, we provide a background on world energy outlook in the first part of the paper. BRIEF REVIEW OF CURRENT LITERATURE The interlikage between energy and regional economic growth is well established. Many studies on the relation between energy consumption and GDP growth has been done by researchers in international context. Notable among them are Miranda-da-Cruz (2007), Lee and Chang (2006), Crompton and Wu (2004), Zachariadins (2007). Among the studies to reinvestigation the long run co-movement and the causal relationship between energy consumption and real GDP, the study by Lee (2005) is found to be significant one. In Indian context, the study by Paul and Bhattacharya (2004) tried to examine the causality relation between energy consumption and economic growth in India. Studies discussing the regional development of energy demand across states of India are sparse and the present author did not come across any study in this aspect of Indian context. The present paper aims to fill this gap in existing literature. GLOBAL AND ASIAN ENERGY OUTLOOK In Asia, energy demand has been growing rapidly due to the rapid growth of developing nations. The average annual growth rate of energy demand in Asia is recorded at 4.6 per cent during 1980 to 2007, far above the world average of 2 per cent. High demand for energy from the developing countries is basically an indicator of the take off stage of Rostows theory of stages of growth; taking off an economy from a situation of under or un development to rapid industrialization and socio-economic development. To 2035, the primary energy demand in the world is expected to grow at an average annual growth rate of 1.5 per cent while that for Asia is expected to be 2.5 per cent. The world demand for energy is expected to reach 16.9 Billion Ton of Oil Equivalent (BTOE), a 1.5 fold increase from 11.1 btoe in 2007. While that for Asia is expected to reach at 7.1 btoe by 2035 from a figure of 3.5 btoe 2007. Asia would account for about sixty per cent of the worlds increased energy demand by 2035, reflecting sharp economic growth across developing countries in the continent. However, to discuss on all developing economies of the world together, energy consumption in these countries is projected to grow at an average annual rate of 3 per cent from 2004 to 2020. In industrialized countries where the economies are already mature and the economy has already reached in the 3rd stage of demographic transition with low population growth rate, the demand for energy is

Journal of Regional Development and Planning, Vol. 1, No. 1, 2012

53

expected to grow at an annual average rate of 0.9 per cent only. Energy demand in developing world was projected to surpass that of industrialized developed economies by 2010. Rapid economic growth in Asian economies, especially in India and China will be causing the will be demanding the maximum percentage of this increased energy demand. Table 1 Regional Energy Use & Growth across the globe
Regions USA EU Middle East China Latin America Africa India Population (Million) Growth 1990 2008 (%) 250 305 22 473 132 1141 355 634 850 499 199 1333 462 984 1140 5 51 17 30 55 34 Energy Use (1000 TWh) Growth 1990 2008 (%) 22.3 26.6 20 19 2.6 10.1 4 4.5 3.8 20.4 6.9 24.8 6.7 7.7 7.2 7 170 146 66 70 91 Energy use kWh / Capita Growth 1990 2008 (%) 89021 87216 2 40240 19422 8839 11281 7094 4419 40821 34774 18608 14421 7792 6280 1 79 111 28 10 42

The World 5265 6688 27 102.3 142.3 39 19422 21283 10 Source: Wikipedia, from http://en.wikipedia.org/wiki/World_energy_consumption, accessed on 07-03-2012.

The growth rate of energy demand in developing countries of Asia is projected to be as high as 3.7 per cent per year. The emerging nations of Asia are expected to double their energy consumption in next 20 years, accounting for 65 per cent of the total energy demand for all developing countries. Table-1 discusses on to the growth of energy consumption across different zones of the world with special reference to the two emerging nations, India & China. It is quite significant that the growth rate for energy demand in Middle East countries comprised of India and China is highest among all others, reflecting high growth in past two decades with commitment for future rapid growth as well. ENERGY AS CONSTRAINING FACTOR TO REGIONAL DEVELOPMENT Energy is one of the important inputs for production, conversion, processing etc. Energy is required to continue production and also to achieve high production, no matter which sectors production is taken. This is the reason why energy now well-considered as a separate sector of production. As production is the basis of all economic activities, we can say energy is an essential input for each of the economic development. It is better to state that energy is perquisite to economic development; energy is now an essential input for each of the social and environmental dimensions of human development. This crucial input helps to achieve economic development by enhancing industrial growth, productivity and providing access to global markets and trade. Energy services helps to fulfill the basic human needs of nutrition, warmth and lighting and also needs like education and health and thus it makes way for social development. So, to achieve higher level of production, quantitative and quantitative enhancement of energy sources is certainly necessary. One of the major drivers of energy use is urbanization and related growth of industrialization, expansion of transportation, etc. Thinking development in a decentralized way by dividing the

54

JOURNAL OF REGIONAL DEVELOPMENT AND PLANNING

whole geographical area of the world in some strata as in stratified random sampling, the development of the countries across the world can be better represented in terms of zonal development; one strata being equivalent to a zone. This would serve the purpose of identifying energy as a constraining factor towards zonal development as it is always better to identify the backward area first and then identify the cases of backwardness. As known to all of us, resource is the basic pre requisite for growth; dividing world into several regions it is quite prominent that the Middle East and Africa are the two regions which were lagging behind in the last century. One of the main reasons for this underdevelopment or lack of development is the lack of energy supply. In recent days urbanization and industrialization in developing world, especially in the Middle East has reached an unprecedented level. Now the basic question is, will this region be able to sustain this growth or access energy as an input to their progress would be acting as a constraint. Because it can be significantly noted by looking at the historical data on volume of GDP and energy consumption for developed countries that higher is the energy consumed, higher is the volume of Gross Domestic Product, indicating high GDP is fuelled by high energy consumption. And increased volume of production has benefited the economies with a trickledown effect towards creating more employment opportunity, generating income, increasing welfare thereby. Focusing of Indian Economy and her regional development, it is quite clear from the econometric exercise that states with more energy usage is having high net state domestic product. Considering the usage of electricity as one of the key energy inputs to the growth of an economy, indicated by Net State Domestic Product (NSDP), Table-2 shows the potential NSDP and accordingly loss of net state domestic product for states. By using the figures of actual and potential NSDP, the tabulated analysis tries to reflect the potential growth of the states, economy in aggregate, if the total energy demand would have been met. Madhya Pradesh, Uttar Pradesh, Maharashtra, Bihar, Punjab are among those states which are found to be having maximum loss. ENERGY SCENARIO IN INDIA There is now a growing awareness amongst the scientific community and the civil society on the need for a global energy future with distinct departure from past trends and patterns of energy usage. So far the predominant route of energy value chain comprise of generation of steam to rotate turbine, from burning of fossil or nuclear fuels. The energy that is used for generation of power finds its application in various economic activities and house-hold uses. Economic growth drives the energy demand and consequently it has been observed that each 1 per cent increase in Gross Domestic Product (GDP) has given rise to 0.6 per cent increase in primary energy consumption. Energy plays the central role to reduce poverty and provides principal facilities in the area of health, literacy, governance and equitable growth. However it is not the energy per- se that is used for any activity or process, rather it is energy service that creates value addition. There is thus a underlying relation between access to high quality energy services with human development and standard of living. Inadequate and lack of equitably available energy services create hindrance for employment generation and acts as a constraint to education and health services. Electricity The electricity sector in India is the fifth largest in the world in terms of installed generation capacity which was 190592.55 MW as on February 2012. In which, thermal power plants being

Journal of Regional Development and Planning, Vol. 1, No. 1, 2012

55

the major contributors, constitute of 55.32 per cent of the installed capacity. Hydroelectricity power generation capacity comprises of 20.38 per cent and that of nuclear and renewable are 2.50 per cent and 11.66 per cent respectively. Table 2 Loss to Net State Domestic Product due to Power Shortage NSDP at Factor Cost (in ` cr) 2009-10 Percentage loss

to Actual NSDP Actual Potential Loss Jammu & Kashmir 30765 40884 10119 32.9 Uttar Pradesh 316906 404360 87454 27.6 Madhya Pradesh 139300 171985 32685 23.5 Maharashtra 634829 781316 146487 23.1 Arunachal Pradesh 4845 5948 1103 22.8 Mizoram 3901 4768 867 22.2 Bihar 110778 129472 18694 16.9 Meghalaya 7645 8930 1285 16.8 Punjab 124116 144030 19914 16.0 Sikkim 2175 2446 271 12.5 Tripura 11917 13215 1298 10.9 Assam 60912 66551 5639 9.3 Jharkhand 70309 76291 5982 8.5 Karnataka 219358 237667 18309 8.3 Puducherry 7977 8559 582 7.3 Andhra Pradesh 304018 325577 21559 7.1 Uttarakhand 40065 42866 2801 7.0 Tamil Nadu 312948 333609 20661 6.6 Gujarat 283930 297231 13301 4.7 Haryana 137201 143276 6075 4.4 Himachal Pradesh 28756 29937 1181 4.1 Chandigarh 12418 12808 390 3.1 West Bengal 269454 277098 7644 2.8 Chhattisgarh 63297 64888 1591 2.5 Kerala 159144 163059 3915 2.5 Rajasthan 156952 160768 3816 2.4 Goa 16590 16952 362 2.2 Orissa 97359 98200 841 0.9 Delhi 157817 159016 1199 0.8 All India 3785682 4221707 436025 10.3 Source: Authors Calculation based on data from Handbook of Statistics on Indian Economy, RBI and Annual Report of Central Electricity Authority.

State/Region

Despite India being fifth largest country in the world in terms of installed capacity, per capita average annual domestic electricity is very low against the world average. It was merely 96 kwh in rural area and 288 kwh in urban areas in 2009 for those who have access to electricity, in contrast to the worldwide per capita annual average of 2600 kwh and 6200 kwh in European Union. At the end of the year 2011, over 300 million of Indian citizens had no access to electricity which is a hard pointer to our countrys human development index. This constitute about one third of countrys rural mass and 6 per cent of the urban population. Again the areas covered by electricity networks suffer from intermittent power cut and voltage fluctuation. This is a major drag to our economy in general and manufacturing sector in particular

56

JOURNAL OF REGIONAL DEVELOPMENT AND PLANNING

Figure 1 Power Generation Fuel Based Installed Capacity

Source: CEA (2010)

Intensifying fuel crisis due to uncertainty in the availability of domestic coal coupled with increasing prices of imported coal and natural gas are currently the major hindrance in augmenting capacity in power sector. If this issue not addressed with much loss of time the countrys economic growth would be seriously hindered. And the government vision of power for all by 2012 at affordable price will remain a distant dream. To review the current situation as regards the availability of various fuels let us start with coal which in the main steam of our power sector. Coal India now ranks third amongst the coal producing countries in the world. Being the most abundant fossil fuel in India till date, it continues to be one of the most important sources for meeting the domestic energy needs. It accounts for 55 per cent of the countrys total energy supplies. The share of coal in the total energy needs of the country is expected to remain above 50 per cent till 2032 as projected by the Planning Commission of the GOI in the integrated Energy Policy, 2006. Planning Commission in its 12th plan approach document has stated a target of 1,00,000 MW for 12th plan. It is estimated that the country would require 825 million tones of coal by 2017 to meet this capacity addition target. India has been confronting severe coal shortages over the last few years, which has led to persistent complaints by State governments, public and private sector power generators, and steel companies regarding the availability and timely delivery of coal. This deterioration in India's ability to extract its considerable domestic coal reserves is reflected in policy as well. The newest coal fuel supply agreements (FSA) by the Ministry of Coal guarantee at most 75 per cent of a power plant's fuel requirement; the balance must be procured privately. Not surprisingly, many large coal consumers are resorting to higher quality imported coal instead, where the contractual and logistical obligations are more complex. In fact, coal exporting

Journal of Regional Development and Planning, Vol. 1, No. 1, 2012

57

countries most recently Indonesia have begun responding to the global upsurge in coal demand by increasing prices and changing regulations. Indian import of thermal coal is projected to be at 265MT in year 2016-17, which is about tenfold increase from the 2006-07 level. Figure 2 Year wise Import of Thermal (Non Coking) Coal

Note: Figure for 2016-17 is an estimated figure. Source: CIL (2012)

Natural Gas While coal continues to be the dominant fuel for the power sector, natural gas has only supported about 18000MW of power generation. Drop in gas availability in the KG -6 block from 60 MMSCMD to 35.57 MMSCMD in February 2012 has created a crisis for operating the existing gas based power stations and those under construction. On the other hand a price of imported gas has risen significantly since March 2011 due to the fallout of earthquake in Japan. Destruction in the nuclear plant has forced the country to import large quantities of gas to generate power. In addition, the sharp decline in rupee has aggravated the situation. The supply of gas under the administered price mechanism (APM) is declining. Natural gas from local fields operated by ONGC and Reliance cost $4.2 per unit, while imported prices have shot up to $16 per unit putting immense pressure on the price front.

58

JOURNAL OF REGIONAL DEVELOPMENT AND PLANNING

Figure 3 Natural Gas Demand - Supply Scenario

Source: E&Y Report on Tapping growth potential in the Indian hydrocarbon value chain

Figure 4 Demand Supply Scenario of Crude Oil

Source: Ministry of Petroleum and Natural Gas, Government of India

Crude Oil

Journal of Regional Development and Planning, Vol. 1, No. 1, 2012

59

Indias crude oil consumption has increased exponentially over the past years. On the other hand, the countrys crude oil production continued to be stagnant, resulting in its increased dependence on crude oil imports. The country produced 33.7 MT of crude oil in FY10, as compared to 34 MT in FY07; Fueled by strong economic growth, the demand for oil has outpaced domestic production, resulting in an increased dependence on imports. The balance of recoverable oil reserves as on 1 April 2006 is around 1653 MT (Directorate General of Hydrocarbon, DGH 200506 report), which can sustain the current level of production for the next 35 years. The current level of production barely caters to 26 per cent of the petroleum products demand and the balance oil requirements are met by importing the crude. Hydro Power Hydropowers share of the countrys generation capacity is expected to remain around 25 per cent in the long run. Presently total installed capacity is 38,848.40 MW that constitute 20.38 per cent of the total installed capacity. Even if the potential of 150,000 MW is fully exploited by 2030-31, the share of hydro would in fact be less than 25 per cent that is very small as per our needs. Big hydro power projects implementation suffer from issues like environmental concerns, resettlement and rehabilitation, land acquisition problems, power evacuation problems, the dearth of good contractors, and in some cases, inter-state issues that have contributed to the slow pace of hydropower development in the country. Quick response of hydro power in rapidly changing load pattern is a major advantage. As per Ministry of New and Renewable Energy norms small hydro power projects are those installations that have a capacity of 25 MW or less. They are categorized as renewable source of energy. They are ideally suited as distributed generation in far flung areas not connected by grid network. Nuclear Energy Nuclear power from 20 reactors accounts for less than 3 per cent of the electricity that India generates. Only 4780 MW capacity contributed by Nuclear Power installed out of 190592.55MW total installed capacity. In spite of cost of establishing of Nuclear power plant more than thermal power plant India wants to boost Nuclear power capacity by 63000 MW by 2032. But the nuclear accident at Fukushima in Japan in March 2011 changed many nations attitude towards nuclear power. In India, there is need to addressee, safety and environmental issues, livelihood and displacement concern. India has limited reserves of uranium but after the Nuclear Supplier Group (NSG) allowed its 46 member-nation to trade with us, we have signed several deals, including for the supply of uranium by Russia, Mongolia, Kazakhstan, Argentina and Namibia. ELECTRICITY GENERATION IN INDIA: THE REGIONAL SCENARIO After having a discussion on the different energy sources that contribute to growth of an economy, a more specific analysis has been done on electricity which acts as the one of the major inputs to a production process and is being produced from the energy sources discussed earlier. Demand for electricity is basically an indicator towards growth potential of a state in the sense that the NSDP of the state would have been higher if the total capacity is utilized or in other words, lack of supply leads to underutilization of production capacity. In India, Western Region comprised of the major states like Maharashtra, Madhya Pradesh, Gujarat and Chhattisgarh is found to be having the maximum shortage of electricity to cater the need of their growth potential (Table-3). These states are presently having maximum number of Industries and are highly contributing to the economy in

60

JOURNAL OF REGIONAL DEVELOPMENT AND PLANNING

terms of contribution to the gross domestic product. Western zone alone has the 42 per cent of the total electricity deficit of India, followed by Northern Zone which contributes to 35 per cent of the total deficit in India. Among the states in Northern Region, Uttar Pradesh is having the maximum shortage, followed by Punjab, Jammu & Kashmir, and Rajasthan. This zonal analysis would be helpful to identify the regional energy demand backed by the growth potential of the region.

Table- 3 Availability and Requirement of Electricity Across States during the year 2009-10
State/Region Chandigarh Delhi Haryana Himachal Pr Jam & Kas Punjab Rajasthan Uttar Pr Uttaranchal Northern Chhattisgarh Gujarat Madhya Pr Maharashtra Goa Dam & Diu D.N. Haveli Western Andhra Pr Karnataka Demand (In MU) 1,576 24,277 33,441 7,047 13,200 45,731 44,109 75,930 8,921 254,232 11,009 70,369 43,179 124,936 3,092 1,934 4,007 258,526 78,996 45,550 Availability (In MU) 1,528 24,094 32,023 6,769 9,933 39,408 43,062 59,508 8,338 224,663 10,739 67,220 34,973 101,512 3,026 1,802 3,853 223,125 73,765 42,041 Surplus /Deficit -48 -183 -1,418 -278 -3,267 -6,323 -1,047 -16,422 -583 -29,569 -270 -3,149 -8,206 -23,424 -66 -132 -154 -35,401 -5,231 -3,509 State/Region Tamil Nadu Pondicherry Lakshadwip Southern Bihar DVC Jharkhand Orissa West Bengal Sikkim And & Nic Eastern Arunachal Pr Assam Manipur Meghalaya Mizoram Nagaland Tripura NEastern Demand (In MU) 76,293 2,119 24 142,165 11,587 15,199 5,867 21,136 33,750 388 240 88,167 399 5,122 524 1,550 352 530 855 9332 752,422 Availability (In MU) 71,568 1,975 24 133,002 9,914 14,577 5,407 20,955 32,819 345 180 84,197 325 4,688 430 1,327 288 466 771 8295 673,282 Surplus /Deficit -4,725 -144 0 -9,163 -1,673 -622 -460 -181 -931 -43 -60 -3,970 -74 -434 -94 -223 -64 -64 -84 -1,037 -79,140

Kerala 17,619 17,196 -423 All India Source: Annual Report 2009-10, Central Electricity Authority.

ENERGY IMPORTS Traditionally, India has remained supply constrained in energy and the country is forced to resort to imports to bridge the gap between demand and supply. With the rising demand of natural gas in the power and fertilizer sectors, LNG imports were started in 200405. Though LNG imports have met the demand to some extent, still there is a considerable shortfall. Oil imports also continue to grow every year to meet the petroleum products demand. Of late, import of thermal coal by the

Journal of Regional Development and Planning, Vol. 1, No. 1, 2012

61

power utilities and cement industry also started increasing besides the coking coal imports by steel industry to meet the growing demand. As a result of this, the share of imports in the total primary energy supply is progressively rising. Table 4 Projected Primary Energy Requirement for India, 2030 (in Mn. Tonne)
Fuel Coal including lignite Range of Requirements 632 - 1022 Assumed Domestic Production 560 Range of Imports 72 - 462 Imports (in per cent) 11-45

Oil 350 -486 35 315 -451 90 - 93 Natural gas including coal bed 100 - 197 100 0 -97 0 - 49 methane Total Commercial primary energy 1351 - 1702 --387 - 1010 29 -59 Note: Range of imports is calculated across all scenarios by taking the minimum requirement and maximum domestic production as the lower bound and maximum requirement and minimum domestic production as the upper bound. Source: Integrated Energy Policy Report (IEPR), 2006, Government of India.

RURAL ELECTRIFICATION Access to power has been particularly poor in rural habitations and the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) was launched to remedy this problem by providing connections to all villages and free connections to BPL families. There are, however, still a large number of habitations left uncovered and a very large population that has no connectivity. It is desirable to try and universalize access of power during the Twelfth Plan and this requires dealing with the large backlog in the States of Uttar Pradesh, Bihar, Orissa and Assam and some of the other North East States. However for effective universal access the RGGVY programme has to be restructured. Connectivity by itself is only part of the problem, since in many States there is also a real shortage of power. Besides RGGVY focuses only on household supply and does not address the need for providing electricity for agriculture, which needs three phase supply. This in turn requires strengthening of the rural network, and not just last mile connectivity to households, which is what RGGVY covers. There are other schemes which provide electrical connectivity to people below poverty line. Solar lanterns have been distributed at subsidized rates. There are also initiatives for developing other resources such as biomass power generation. As of December 2011, the status of Rural Electrification shows that out of 593732 inhabited villages, 551187 villages have been electrified, i.e. about 92.8 per cent villages have been electrified so far. However, this figure hides more than it tells, since even if one household in a village is electrified, that village is considered electrified. Thus in reality, if we consider number of households electrified, we are far behind. CONCLUSION India is among the fastest growing economies of todays world and there is no doubt that this growth is fuelled by energy. Naturally, the issue of energy security has become a growing concern for India, both at the macro level and at the regional level. Increased dependence on imported energy seems to be the prime problem for the economy as it leads to higher import bill, deficit in the balance of payment, and strategic vulnerability. Imports accounted for 30 per cent of our Total

62

JOURNAL OF REGIONAL DEVELOPMENT AND PLANNING

Primary Commercial Energy Supply (TPCES) in 2004-05, up from 17 per cent of TPCES in 1991. The projected energy requirement of India indicates that, apart from oil and gas, import of coal is also likely to grow substantially over time. This would impact the economy in terms of sudden market risk, i.e. price volatility as well as irregularity of supply, resulting in inflation and overall economic instability. Hence, to ensure sustainable development, our economy has to ensure energy security. This can only be done by reducing the dependence on imported and nonrenewable energy by substituting with other forms of energy. While Indias search for new and renewable energy resources to ensure sustainable development and energy security began in 1970, it was not until 1992, that the government created a separate ministry to cater to this particular aspect of national importance. Since then the government has actively been making long term strategy for the promotion of renewable energy sources and has provided much needed policy push to put India on the path of renewable and self dependent energy economy. Providing initiatives to the private developers through Generation Based Incentives, introducing Renewable Purchase Obligations on the states and allowing global competition has encouraged technical innovation and brought down renewable energy costs nearly by fifty percent. Through Jawaharlal Nehru National Solar Mission (JNNSM) India is certainly on the path of environmentally benign energy economy providing the nation energy security as well as meeting her environmental obligations. The mission is based on private participation providing enough business opportunities to major and medium entrepreneurs. Given the regional disparity in energy availability and its impact on regional growth, renewable energy resources can also play a crucial role in providing power to remote areas. Apart from continuing to provide support to renewable energy schemes, efforts should also be directed towards large-scale deployment of related technologies in order to further bring down their costs. Decentralized power generation, especially in remote locations where the grid cannot be extended, should necessarily be based on renewable energy to provide these regions with access to clean and reliable energy. Continued emphasis has to be placed on other renewable resources, especially on expanding wind power generation and in the emerging area of solar thermal and solar photovoltaic. While a National Solar Mission plans for a capacity of 22,000 MW by 2022, C-WET estimated a technically feasible wind potential of 49,000 MW. A fresh assessment of wind power potential by some agencies has mentioned a higher figure which needs realistic review by the Ministry of New and Renewable Energy (MNRE) based on scientific norms. Offshore wind energy potential has remained largely unexplored, which needs considerable technology upgradation and project implementation skill. It is also necessary that scientific and technological (S&T) developments, especially in the solar energy field, are sufficiently internalised to keep the country abreast of international developments. India receives 5000 trillion kwh per year equivalent of energy through solar radiation and just 1% of the countrys land area has the potential to meets its entire electricity requirements till 2030. The need, however, is to bring down the cost of harnessing this vital source of energy and to make it economically viable. To summarise, self reliance in energy supply as far as feasible, protecting the economy from price instability and strategic vulnerability, and harnessing the huge potential of renewable energy sources are the three steps which can ensure sustainable regional development of the India economy in the coming years. __________________________________

Journal of Regional Development and Planning, Vol. 1, No. 1, 2012

63

[The author acknowledges research support from Sri Koushik Hati.]

Reference
Chien-Chiang Lee (2004) Energy consumption and GDP in developing countries: Association Cointegrated Panel Analysis, Energy Economics 26, 977-983. Chien-Chiang Lee, Chun-Ping Chang (2005) Structural breaks, energy consumption, and economic growth revisited: Evidence from Taiwan, Energy Economics 27, 857-872 Chien-Chiang Lee, Chun-Ping (2007) Energy consumption and GDP revisited: Association panel analysis of developed and developing countries, Energy Economics 29, 12061223 M. Miranda-da-Cruz (2007) A model approach for analyzing trends in energy supply and demand at country level: Case study of industrial development in China, Energy Economics 29, 913933 Paul Crompton, Yanrui Wu (2005) Energy consumption in China: past trends and future directions, Energy Economics 27, 195-208 Paul, Shyamal and Rabindra N. Bhattacharya (2004) Causality between energy consumption and economic growth in India: Association note on conflicting results, Energy Economics 27, 415-427 Theodoros Zachariadis (2007) Exploring the relationship between energy use and economic growth with bivariate models: New evidence from G-7 countries, Energy Economics 29, 1233-1253

Data Sources
CEA (2010) Central Electricity Authority of India, Annual Report 2009-10 [from http://www.cea.nic.in/reports/yearly/annual_rep/2009-10/ar_09_10.pdf, accessed on 10-03-2012] (2000) Energy Statistical Manual, International Energy Agency, http://www.iea.org/stats/docs/statistics_manual.pdf, accessed on 10-02-2012] 2000 [from

CIL (2012) Annual Report 2011-12 [from http://www.coal.nic.in/annrep1011.pdf, accessed on 10-02-2012] IEA

IES (2000) World Energy Outlook, 2000 [from www.iea.org/weo/docs/weo2000.pdf, accessed on 10-032012] IES (2004) World Energy Outlook, 2004 [from www.iea.org/weo/docs/weo2004.pdf, accessed on 10-032012] IES (2006) World Energy Outlook, 2006 [from www.iea.org/weo/docs/weo2006.pdf, accessed on 10-032012] USDE (2007) - International Energy Outlook, 2007, Office of Integrated Analysis and Forecasting, U.S. Dept of Energy, Washington DC, [from ftp://tonto.eia.doe.gov/forecasting/0484%282007%29.pdf, accessed on 15-02-2012]

64

JOURNAL OF REGIONAL DEVELOPMENT AND PLANNING

BOOK REVIEW Development, Displacement and Disparity: India in the last quarter of the twentieth century; Ed: Nirmala Banerjee and Sugata Marjit; Orient Blackswan, 2005; 317 pages; Price: ` 545.00
The volume under review is a collection of essays on issues related to regional and interpersonal disparity in India, a topic that is both important and contemporary. The book has three sections first section explores theoretical issues related to regional disparities, second section deals with issues related to interpersonal disparities, and the third section discusses inequalities emerging in the last two decades out of the structural adjustment program. The first paper of the first section by Amiya Bagchi provides a historical context on the concepts of inequality and disparity. While he accepts that inequality is a moral concept, he argues that ownership of productive assets has been instrumental in creating inequality in the modern world. According to him, the caste system has been the root cause of inegalitarian society in India and the affirmative action provide by the constitution have not succeeded to bridge the chasm. The second paper by Sanjoy Chakravorty explores the issue of theoretical proposition to explain or predict regional disparities, past and present. Discussing Jeffrey Williamsons inverted-U theory, Solows model of convergence, Myrdals arguments and the Latin American models of centre-periphery relations, Chakravorty contends that the state in developing countries has never seriously pursued the objective of balanced regional development. Bringing in a historical perspective the author narrates the course of regional disparities in the colonial and the nationalist periods and predicts that the current globalization trends will aggravate interregional disparities. The third paper by Santanu Gupta examines the conflict between policies that promote equity and those that encourage efficiency from welfare economy perspective. While egalitarianism should spread public investment across space evenly, efficiency considerations would require public investments to be chanellised to areas and activities that provide the highest returns. Gupta argues that the amount as also the method of devolution of funds by successive Finance Commissions in India have had significant impact on regional disparity. The last paper of first section by Rongili Biswas and Sugata Marjit also deals with devolution of funds from the Centre to the states under discretionary grants. They argue that direction and amount of these grants are mostly determined by political considerations and influence, rather than economic ones. Using a Lobbying Index for the period 1974-94, they show that actual devolution of discretionary funds is fairly well related to the lobbying index. The second section has two papers, starting with a paper by Martreesh Ghatak exploring the issue of delivery of public goods, especially to the poor. Arguing that governmental institutions have not succeeded in this task, Ghatak justifies emergence of Non-Governmental Organizations (NGOs) in this field. A theory for understanding the role of NGOs in provision of public goods has been developed using various case studies. The second paper is by Abhijit Banerjee explaining the pattern of industrialization in the developing countries. Banerjee argues that location of new industrial units in developing world do not follow the standard locational theories and hence he develops various topologies of industrial development. Notable among them are the Saving-Driven Industrialisation or SDIs, and the

Journal of Regional Development and Planning, Vol. 1, No. 1, 2012

65

Savings-Constrained Industrialisation or SCIs. Banerjee provides various examples of community based neo-industrialisation dirves from India and China and contends that these efforts would be more efficient if the entrepreneur is an insider and can effectively tap the strengths of the community. The third section on post-reform inequalities begins with a paper by Subhash Ray and Kankana Mukherjee on the impact of Surplus Labour on the efficiency of production in Indian industries between 1986-87 and 1999-2000. They argue that there is a common perception that industrial productivity in India has been historically low because employment and efficiency never went together and the reforms were meant to correct this incongruence and promote efficiency in the industrial sector. Using Data Envelopment Analysis the authors argue that Input Congestion due to production workers has adversely affected productivity in Indian industries. They also infer that output-oriented technical efficiency has declined and the problem of labour input congestion has increased after the reforms. The second paper of this section by Buddhadab Ghosh and Prabir De prepares a infrastructure development index (IDI) from several components of economic and social using Principal Component Analysis. To solve the problem of heterogeneity due to varied units of the components where changes in units may lead to greater value of indices, Ghosh and De have divided the original values of the individual variables by their Standard Deviation. This, however, makes the Variance of all the transformed variables equal to unity, thereby loosing their individual variability. The authors infer that hierarchy of the states remained more or less unchanged over 19711981, changing only marginally by 1991. The importance of social infrastructure is underlined from the good performance of Kerala in terms of PCNSDP. The relation between IDI and PCNSDP seems to be non-linear. The third paper is by Abhirup Sarkar and Sukanta Bhattacharya on the effect of trade in foodgrains on industrial employment, poverty and balance of payments using a two-sector macroeconomic model and incorporating the fact that land reforms in India have been uneven across regions. They infer that greater exports of foodgrains would increase the price of food, bring down real income of an average worker, may raise industrial employment and output subject to the condition that mid-sized farms cover a large portion of farmland. The last paper by Saikat Sinha Roy explores the dissimilarity between global trade pattern and Indias export performance. This is an important issue as any dichotomy between Indias export pattern and the global consumption trends will hinder Indias export growth. Sinha Roy argues that growth in exports as seen in the post-reform period is not sustainable because of such contradiction. He recommends diversification of exports, investment in dynamic export-oriented sectors, and transformation of the export basket towards high-technology and more value-added items for future growth of exports. Overall, this book is an important addition to the library of researchers working on regional issues.

Tanushree De

66

JOURNAL OF REGIONAL DEVELOPMENT AND PLANNING

INSTRUCTIONS TO AUTHORS
Manuscripts should be between 5000 and 8000 words accompanied by an abstract/summary of NOT MORE THAN 250 words and a short biographical note, submitted electronically to jrdp.india@gmail.com. Contributors should note that they are addressing a diverse audience of academicia, policy makers, administrators and development practitioners. The manuscript should conform to the template and house style given here, including page size and margins (page size 10 inches long and 7.5 inches wide, with 1 inch wide margin all around). For detailed template see the journal website www.jrdp.in 1. Apart from the article/paper, the contributions should include: (i) the name(s) of the author(s); (ii) the latters professional affiliations; (iii) an abstract of the paper in not more than 150 words; (iv) a Reference list at the end containing details of all the References quoted in the paper. 2. Spellings: Use British spellings throughout, not American spellings. 3. Notes: These should be numbered serially in the text and expanded in the same chronological order at the end of the text in the form of Endnotes. 4. Quotations: Use double quotation marks for the entire quotation, reserving single quotation marks for quoted words within a quotation. The spellings of words in the quotation should be retained as in the original. In case of long quotations (50 or more words), the quotation should be broken off from the text and indented 0.5 inch on the left, with a 1.5 line space above and below the quotation. 5. Italics: Avoid italicising words frequently as that affects readability. Italics should be used only for book titles, journal names, foreign words (like panchayat, bania, guru, etc.), and if a particular word needs to be emphasised. 6. Hyphenation: Use hyphens consistently throughout the article. For instance, words like macroeconomic, micro-credit, sub-sets, long-term, short-term, short-circuit, etc., if hyphenated once, should be hyphenated throughout the text. 7. Capitals: Capital letters should be used sparingly throughout the article as that affects readability. Please refer to the attached Style Sheet for the Indian Journal of Labour Economics to see where ALL CAPS should be used. 8. Numbers: Generally, numbers from one to ten should be spelt out. Numbers above ten should be given in figures. However, if several numbers occur in a sentence or paragraph, all of them should be in figures, for easy readability. In case of units or percentages, all numbers should be in figures. For instance, 3 km., 5 kg., 8 per cent, etc. In case of percentages, the word per cent should be spelt out in the text, but the symbol % can be used in tables, graphs, figures and equations. In case of large numbers, use only millions and thousands, not lakhs and crores. 9. Abbreviations: All abbreviations such as pp., vol., no., Dr., Mr., edn., eds., etc. must end with a full stop. There should also be full stops between initials of names, such as V.K. Seth, G.K. Chadha, D.N. Reddy, etc. However, in case of well known acronyms like USA, UK, UNO, etc. there should not be full stops between the initials. All acronyms should be spelt out at the place of first occurrence with the acronym given in brackets. Subsequently only the acronym can be used. For instance, at the place of first usage, write Jawahar Rozgar Yojana (JRY), but subsequently, write only JRY. 10. Dates: Specific dates should be written as, for instance, November 9, 2002. Decades should be referred to as the 1980s, 1990s, etc. The names of years should be in figures (1998, 2002, etc.), but the names of centuries should be spelt out (twentieth century, twenty-first century, etc.). 11. Figures and Tables: Number each figure and table. All figures and tables should appear at the relevant places in the text and not at the end of the article. All figures and tables should be referred to by their numbers in the text (for instance, Refer to Table 1, Please see Figure 3, etc.). The titles of the tables and figures should be brief and to the point. The Source and Notes, if any, should be given at the bottom of the table or figure. Within the table or figure, numbers should be given in digits, not spelt out. Symbols like %, &, # should be used, where required, within the table or figure. 12. Tables should be typed in Times New Roman 9 point font with Table Footnote in Times New Roman 8 point font, drawn in MS Word native format and not pasted from other applications like MS Excel. 13. Tables/Figures should be contained within the writable area of the page: should not be more than 5 inches wide and 7.5 inches in length. Tables/Figures should not break across pages. Long Tables should be manually divided into continuing parts, repeating headers for each part.