Freeman Spogli Institute for International Studies Center for Health Policy/Center for Primary Care and Outcomes Research Stanford University


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Changing Face of the Indian Energy System: A March Towards Normalcy

Journal Article

Author
Varun Rai

Published by
University of Pennsylvania's Center for the Advanced Study of India, 2008


Much has been said about the fallacies in India’s energy policy - a lack of coherent planning, endemic ills of cross-subsidies, inefficiencies of state-owned companies, and so on - to argue the impossibility of India’s ability to meet the energy demands of a growing economy. Although true in past, this argument is weakening. Amidst excessive criticism of every single government action, the real, but subtle, face of Indian energy policy has not attracted mass attention yet. And understandably so:

India’s energy policy is in flux, passing through a painful, resistive, massively wrenching period that makes its present hard to distinguish from its past. However, the free-market spirit embodied in the new energy policies put in place following the 1991 economic crisis in India are beginning to come of age. The more this spirit is augmented and spread to encompass wider parts of the Indian energy system, the higher the efficiency and reliability of India’s energy supply will be.

The economic crisis in 1991 in India, caused by rising external debts and dwindling foreign exchange reserves, was a shock for Indian policy makers that made clear the need for deregulation and for opening up to private capital.