enrgy law seminar
TRANSCRIPT
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DR RAM MANOHAR LOHIA NATIONALLAW UNIVERSITY
SEMINAR PAPER :NDA GOVERNMENT’S APPROACH TOWARDSENERGY SECTOR—POLICIES ISSUES AND CHALLENGESAND ITS IMPACT ON ECONOMY
ENERGY LAW
MADE UNDER ABLE GUIDANCE OF:SUBMITTED BY:
Ms. Shakuntala Sangam Anurag
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Assistant Professor B.A. LL.B. (Hons.)DR.RMLNL ! Lu"kno# Semester$ %th Roll No. &'
ACKNOWLEDGEMENT
This seminar paper would not have been possible without the guidance and the
help of several individuals who in one way or another contributed and extended
their valuable assistance in the preparation and completion of this study.
First of all, I wish to express my deep sense of gratitude in thanking Ms.
Shakuntla Sangam , Assistant Professor and faculty member of our niversity,
for her able guidance and useful suggestions, which helped me in completing the pro!ect work, in time.
"econdly, I give a warm thanks to the #ibrary "taff of our niversity #ibrary for
consistently helping me in finding out the relevant material for this pro!ect work.
Finally, yet importantly, I would like to express my heartfelt thanks to my beloved
parents for their blessings, my friends and classmates for their help and wishes for
the successful completion of this pro!ect work.
-Anurag
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TABLE OF CONTENTS
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TITLE: ENERGY CHALLENGES IN INDIA: POLICES AND ISSUES
ABSTRACT Numerous =oli"> reforms o?er the =ast &< >ears ha?e shifte@ ,n@ia s energ> se"tor from a
=re@ominantl> go?ernment$o#ne@ s>stem to#ar@s one ase@ on market =rin"i=les! offering a
more le?el =la>ing fiel@ for oth =u li" an@ =ri?ate se"tors. Politi"al "om=leCit> an@ a tra@ition
of so"ialist e"onomi" =ra"ti"es! ho#e?er! hin@ere@ the "om=lete li erali ation of ,n@ia s energ>
se"tor! lea@ing to su $o=timal out"omes. ,n this sense! the huge la"kouts that o""urre@ in
northern ,n@ia in /ul> & a""ess to the entire =o=ulation le@ to #ell$meaning =oli"ies
@esigne@ to =rote"t the =oor! ut resulte@ in a s>stem of untargete@ =ro@u"er an@ "onsumer
su si@ies that =re?ent a more thorough im=lementation of a #ell$fun"tioning an@ finan"iall>
soun@ energ> se"tor. ,n "om ination #ith an in@ustrial =oli"> that aims to =rote"t the in@igenous
manufa"turing in@ustr> through im=ort su stitution! ,n@ia no# fin@s itself tra==e@ half#a> along
the transition to#ar@s an o=en an@ #ell$=erforming energ> se"tor. ,n@ia s energ> se"tor is
in"reasingl> una le to @eli?er a se"ure su==l> of energ> ami@ gro#ing @eman@ an@ fuel im=orts.
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,n "onFun"tion #ith a rising su si@> le?el an@ s>stemi" failure to ensure =ro=er re?enue
"olle"tion along the ?alue "hain! the finan"ial "a=a"it> of energ> se"tor =la>ers is signifi"antl>
un@ermine@. La"k of suffi"ient "a=a"it> to make timel> an@ a@eEuate in?estments gi?es reason to
fear that ,n@ia is hea@ing to#ar@s energ> "rises. ,n"reasing im=ort @e=en@en"> eC=oses ,n@ia to
greater geo=oliti"al risks! flu"tuating #orl@ market =ri"es an@ intensif>ing international
"om=etition. ,n@ian energ> =oli"> "annot e set in isolation an@ nee@s to a""ount for rising
glo al inter@e=en@en"e! #hile simultaneousl> "ommuni"ate@ a==ro=riatel> to the =u li" an@
refle"te@ in =oli"> @e ates. ,n@ia shoul@ o?erhaul its "urrent =at"h#ork of energ> =oli"ies in
fa?or of a "om=rehensi?e an@ "lear$"ut =oli"> that en"ourages e"onomi" an@ so"ial @e?elo=ment
through relia le energ> su==lies. here are siC main "hallenges that nee@ to e a@@resse@ to
"reate a #ell$fun"tioning an@ finan"iall>$?ia le energ> market in ,n@ia! #hi"h shall e @ealt #ith
in @e=th in the final =a=er.
1. AIM & OBJECTIVE
o "om=lete the transformation of ,n@ia s energ> se"tor into an o=en an@ fun"tioning energ>
market! the "ountr> nee@s strong =oliti"al lea@ershi= to "on?e> "lear =oli"> messages. 9reEuent
=o=ulist remarks! #hi"h! for eCam=le! =romise free ele"tri"it>! are not "on@u"i?e to "reating the
right =u li" =er"e=tion of energ> as a "ommo@it>! not an entitlement. 9urthermore! in the "onteCt
of an in"reasing nee@ for in?estments an@ the integration of ,n@ia s energ> se"tor into the glo al
energ> market! ,n@ia nee@s to align its energ> =oli"ies an@ institutions #ith glo al =ra"ti"es.
,n@ia shoul@ o?erhaul its "urrent =at"h#ork of energ> =oli"ies in fa?or of a "om=rehensi?e an@
"lear$"ut =oli"> that en"ourages e"onomi" an@ so"ial @e?elo=ment through relia le energ>
su==lies.
!. HYPOTHESIS After a @e"a@e of unfinishe@ li erali ation of the energ> se"tor! ,n@ia isno# stan@ing at the "rossroa@s #ith a nee@ for the neCt =hase of energ> se"tor reform. Strong
=oliti"al lea@ershi= is ?ital to a@@ress energ> "hallenges.
". INTRODUCTION
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Ra=i@l> in"reasing energ> @eman@ an@ gro#ing "on"ern a out e"onomi" an@ en?ironmental
"onseEuen"es "all for effe"ti?e an@ thorough energ> go?ernan"e in ,n@ia. o un@erstan@ the
@>nami"s of the energ> =oli"> frame#ork go?erning ,n@ia s energ> se"tor! it is essential to
"om=rehen@ the =oli"> o Fe"ti?es an@ "onteCt in #hi"h the> are =la"e@. hree main energ>
=oli"> o Fe"ti?es are =ursue@ > the ,n@ian go?ernment:
Firstly ! a""ess to energ> is the foremost goal in ,n@ia s energ> =oli"> making! as nearl> one$
Euarter of the =o=ulation la"ks a""ess to ele"tri"it>. his im=lies ensuring the su==l> of a@eEuate
an@ relia le energ> to the ,n@ian =o=ulation ami@ gro#ing energ> @eman@! olstere@ >
e"onomi" gro#th. Secondly ! energ> se"urit> is @ri?en > in"reasing @e=en@en"e on im=orte@
fuels! #hi"h is "ru"ial to meet the ,n@ia s huge energ> @eman@. ,n"rease@ im=ort @e=en@en"e
also eC=oses the "ountr> to greater geo=oliti"al risks an@ international =ri"e ?olatilit>. Finally !
,n@ia is @e@i"ate@ to the mitigation of "limate "hange! although o?er"oming energ> =o?ert> an@
ensuring e"onomi" an@ so"ial @e?elo=ment remains a to= =riorit>. 1 9ulfilling all three o Fe"ti?es
is not an eas> task! as the> "an stan@ in "onfli"t #ith one another. 9or eCam=le! su==l>ing an
affor@a le an@ "onsi@era le amount of energ> using lo#$"ost energ> fuels! =rimaril> "oal!
=otentiall> un@ermines efforts to ta"kle "limate "hange an@ lo"al =ollution. Pursuing the
utilisation of @omesti" resour"es an@ =romoting in@igenous energ> te"hnologies "oul@ hel=
enhan"e energ> se"urit> in the long term! ut @oes not sol?e ,n@ia s energ> =ro lems in the short
term.
his =a=er =ro?i@es a "om=rehensi?e o?er?ie# of ,n@ia s energ> se"tor an@ i@entifies "hallenges
for the =resent NARENDRA MODI le@ NDA government to#ar@s a"hie?ing the "ountr> s
energ> o Fe"ti?es. 0?entuall>! energ> "hallenges that are a==earing a"ross in@i?i@ual energ>
se"tors an@ that are "losel> inter$linke@ #ith one another! =ulling together the issues i@entifie@ in
=re?ious "ha=ters
1 5hose! A 4 (&
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". 1 COUNTRY BACKGROUND
,n@ia has the #orl@ s se"on@ largest =o=ulation of 1.&1 illion in & of Bengal. ,t is an ethni"all> an@ religiousl> @i?erse so"iet> #ith &+ offi"ial
languages! #hilst 0nglish is the su si@iar> offi"ial language. ,n@ia has a"hie?e@ ra=i@ an@
remarka le e"onomi" @e?elo=ment in the =ast t#o @e"a@es an@ e"ame the #orl@ s tenth largest
e"onom> in & >oung =o=ulation #ith a me@ian age of &7.& >ears! ,n@ia is
eC=e"te@ to take o?er hina as the #orl@ s most =o=ulous nation aroun@ &! thus! has emerge@ as one of the most @>nami" e"onomi" =o#ers in the #orl@. 3et
there eCist "ontra@i"tions an@ "om=leCities that =osit "onsi@era le "hallenges to gras= the realit>
of ,n@ia: a @emo"rati" =oliti"al s>stem "o$eCisting #ith an e"onom> #ith tra"es of so"ialism an@
a #i@ening in"ome ga= et#een ur an an@ rural areas as #ell as among states. his se"tion
& ensus &Regimes an@ their ,m=a"ts. 0nerg> Poli">! +%.
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=resents a rief intro@u"tion of ,n@ia s =oliti"al$so"io$e"onomi" lan@s"a=e! aiming to =ro?i@e
insights into ,n@ia s energ> se"tor an@ the "onteCt of its energ> issues
,n@ia is a fe@eral re=u li" ase@ on a =arliamentar> s>stem. he =resi@ent is the hea@ of state an@
the =rime minister is the hea@ of go?ernment. ,n@ia has a i"ameral =arliament s>stem: theoun"il of States! or RaF>a Sa ha! #ith mem ers "hosen > state ministers an@ territorial
assem liesI an@! the House of Peo=le! or Lok Sa ha! #ith mem ers ele"te@ > =o=ular ?ote. he
=resi@ent is the su=reme "omman@er of the arme@ for"es an@ has the =o#er to a==oint the =rime
minister an@ the "oun"il of ministers ase@ on a@?i"e of the =rime minister. 6 Da>$to$@a> =oli">
making is un@ertaken > the =rime minister #ho allo"ates =ositions #ithin the "a inet. he
ele"tion ">"le for =arliament is fi?e >ears.
State$ ase@ =arties often eCer"ise "onsi@era le influen"e on national le?el =oliti"s an@ =oli"ies e>on@ their states. 9urthermore! the multi=li"ation of state$ ase@ =arties makes ele"toral results
at the national le?el un=re@i"ta le! an@ the formation an@ resilien"e of ele"tion "oalitions
@iffi"ult. he ,n@ian onstitution @i?i@es the res=onsi le areas et#een the "entral go?ernment
an@ the states. Areas for #hi"h the "onstitution assigne@ share@ res=onsi ilit> to the "entre an@
the states are "alle@ the on"urrent list. As oth "entral an@ state agen"ies are ?este@ #ith the
=o#er o?er the same su Fe"t! this =ro?i@es a =ossi le "ause for "onfli"t. ,n "ase there is a "onfli"t
on a "on"urrent su Fe"t of national im=ortan"e! the "entral la# =re?ails o?er the state la#s. 7
"." SCOCIAL CONTEXT
Although there has een signifi"ant =rogress in human @e?elo=ment through e"onomi" gro#th!
,n@ia still has a long #a> to go. ,t ranke@ 1+2 out of 1%8 "ountries in the &! ut faile@ to a"hie?e a alan"e@ e"onomi" gro#th et#een rural an@ ur an areas. 9or
instan"e! +8.&J of the national =o=ulation an@ 2&J of the rural =o=ulation li?e elo# the
6 onstitution of ,n@ia! 1'6
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=o?ert> line (BPL) of SD 1.&6 PPP! #hereas &7J of the ur an =o=ulation is "onsi@ere@ BPL
( NDP &s an in@is=ensa le role in the energ> se"tor through state
o#ne@ enter=rises! =u li" =oli"> an@ market regulation! in@ire"t gui@an"e an@ =ersonal net#orks.
o gras= the intert#ine@ @>nami"s in ,n@ia s energ> =oli"> frame#ork! "om=rehen@ing not onl>
the in@i?i@ual role of ea"h ministr> an@ go?ernment agen"> ut also their intera"tion an@
"oor@ination #ith other energ> =la>ers is essential. 9urthermore! some of the main i@eas an@
themes that @ri?e energ> =oli"> @is"ourse in ,n@ia shoul@ e taken into "onsi@eration.'
hisse"tion =ro?i@es ,n@ia s energ> =oli"> "onteCt! institutional arrangements an@ ke> o?erar"hing
=oli"ies for etter un@erstan@ing of the "ountr> s energ> se"tor
#.1 POLICY CONTEXT
n@erstan@ing ,n@ia s energ> =oli"> frame#ork shoul@ egin > looking at =oli"> "onteCts in
#hi"h =oli"> o Fe"ti?es an@ "on"e=ts are lai@ out. his #ill hel= to ans#er some of the Euestions
a out ?arious @e"isions ma@e > ,n@ian =oli"> makers. 9or instan"e! #h> has ,n@ia a@o=te@
eCtensi?e su si@> =rogrammes for energ> =ro@u"ts @es=ite the fis"al ur@enK h> is ,n@ia
relu"tant to a"ti?el> =arti"i=ate in the international legal frame#ork for "limate "hangeK Ho# @o
,n@ian =oli"> makers =er"ei?e rising @e=en@en"e on im=orte@ energ> an@ resulting greater
eC=osure to geo=oliti"al risks! an@ ho# @o the> tr> to a@@ress itK he =oli"> o Fe"ti?es an@
"on"e=ts she@ light on the rationales an@ moti?ations an@ e?entuall>! energ> =oli"> making!
#hi"h are to e @is"usse@ in the follo#ing "ha=ters on the in@i?i@ual fuel se"tors.
#.! POLICY OBJECTIVES
% NDP Re=ort! &
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here are three maFor =oli"> o Fe"ti?es that ,n@ia =ursues: energ> a""ess! energ> se"urit> an@
mitigation of "limate "hange. All three o Fe"ti?es are "losel> relate@! ut sometimes "onfli"t #ith
one another an@ are @eri?e@ from the realit> in ,n@ia. hus! it is "hallenging for ,n@ia to maintain
a alan"e@ a==roa"h in =ursuit of all three o Fe"ti?es.
#." ENERGY ACCESS
Nearl> one$Euarter of the =o=ulation of ,n@ia la"ks a""ess to ele"tri"it>. ,t is im=ortant to
un@erstan@ this =e"uliarit> of ,n@ia s energ> situation #here the maForit> of =otential energ>
@eman@ still remains unmet! unlike most @e?elo=e@ "ountries #here energ> @eman@ has rea"he@
or is "lose to saturation stage. he ,n@ian go?ernment re"ognise@ that e"onomi" @e?elo=ment is
eing hin@ere@ as a "onseEuen"e of energ> =o?ert>. hus! =ro?i@ing energ> a""ess to its entire
=o=ulation has een a to= =riorit> of ,n@ian =oli"> makers for a long time! making it eEuall> or
e?en more im=ortant than energ> se"urit>. ,n@ia s maFor rural ele"trifi"ation s"heme is an
eCam=le of the go?ernment s @etermination to eC=an@ a""ess to ele"tri"it> in ,n@ia s rural
?illages. 1<
2.2 ENERGY SECURITY
1 hallenges! L>@ia Po#ell!
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0nerg> se"urit> takes a "entral =osition in go?ernment =oli"> making. he em=hasis of energ>
=oli"> until the 1'' shortage an@ unsatisfie@ energ> nee@s. Ho#e?er!
in"reasing @e=en@en"e on im=orte@ energ> sour"es! mainl> oil! ut also natural gas an@ "oal!
resulte@ in greater go?ernment attention to the su Fe"t. 11 0nerg> se"urit> is @efine@
"om=rehensi?el> in ,n@ia! as G#e are energ> se"ure #hen #e "an su==l> lifeline energ> to all our
"iti ens irres=e"ti?e of their a ilit> to =a> for it as #ell as meet their effe"ti?e @eman@ for safe
an@ "on?enient energ> to satisf> their ?arious nee@s at "om=etiti?e =ri"es! at all times an@ #ith a
=res"ri e@ "onfi@en"e le?el "onsi@ering sho"ks an@ @isru=tions that "an e reasona l> eC=e"te@
(P ! & se"urit>
strateg>. Se"on@! ,n@ia is anCious a out su@@en in"reases in glo al energ> =ri"es as the>
un@ermine the a?aila ilit> of energ> to its =eo=le an@ eCa"er ate the national finan"ial [email protected]>! there is a "on"ern a out =ossi le a ru=t su==l> @isru=tion! #hi"h has le@ to efforts to
@i?ersif> su==l> an@ fuel an@ a"Euire o?erseas assets.
#.$ CLIMATE CHANGE
here is #ell$a""e=te@ re"ognition of the im=a"ts of "limate "hange among ,n@ian =oli"> makers
an@ the general =u li"! although =riorit> is gi?en to e"onomi" an@ so"ial @e?elo=ment. ,n@ia is a
signator> to the nite@ Nations 9rame#ork on?ention on limate hange ( N9 )! ut is noto lige@ to "ontain its "ar on emissions as an AnneC ,, "ountr>. 1+ Regar@ing international
attem=ts to esta lish an internationall>$ in@ing regime to "ur "ar on emissions! ,n@ia fin@s it
una""e=ta le! stating that most emissions #ere =ro@u"e@ > @e?elo=e@ "ountries an@ that ,n@ia
nee@s e"onomi" @e?elo=ment an@ in@ustriali ation. ,n@ia s =er$"a=ita emissions are onl> one$
thir@ of the #orl@ a?erage an@ 12J of =er$"a=ita emissions of 0 D mem er "ountries. ,n@ia
took a lea@ing role in the 588 @uring the P 16 in &
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,n@ia is in"reasingl> engage@ in re@u"ing "ar on emissions an@ alle?iating en?ironmental
@[email protected] ,n@ia announ"e@ its National A"tion Plan on limate hange in &
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su==ort S san"tions on ,ran! non$interferen"e > outsi@ers an@ the =rote"tion of ,n@ian
so?ereignt> are fun@amental features of ,n@ian @omesti" an@ foreign =oli">. 1'
2.' INCLUSIVE DEVELOPMENT
he "on"e=t of in"lusi?e @e?elo=ment "an e roa@l> @efine@ as Ggro#th "ou=le@ #ith eEual
o==ortunities . Also "alle@ in"lusi?e gro#th! in"lusi?e @e?elo=ment a==ears freEuentl> in re"ent
=oli"> @o"uments an@ =oli"> @is"ourse! #hi"h is attri uta le to the #i@ening in"ome ineEualit>
in the "ountr> not#ithstan@ing e"onomi" @e?elo=ment. 9or instan"e! the theme of the a==roa"h =a=er for ,n@ia s 1&th 9i?e$3ear Plan is G9aster! sustaina le! more in"lusi?e gro#th . &<
$. INSTITUTIONAL ARRANGEMENTS
here are a num er of =la>ers in ,n@ia s energ> se"tor. ith the Planning ommission at the to=!
fi?e ministries are in "harge of energ> =oli"> for in@i?i@ual fuel se"tors! an@ other ministries an@
state go?ernments @ire"tl> an@ in@ire"tl> ha?e influen"e on energ> =oli">.
1' "upra Note At 11.
&< , i@.
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6.1 NATIONAL INSTITUTION FOR TRANSFORMING INDIA (N, ,)
he institution is the su""essor to the Planning ommission! an@ #ill ser?e as O hink ank of
the 5o?ernment a @ire"tional an@ =oli"> @>namo. N, , Aa>og #ill =ro?i@e 5o?ernments at the
"entral an@ state le?els #ith rele?ant strategi" an@ te"hni"al a@?i"e a"ross the s=e"trum of ke>
elements of =oli">. he latter in"lu@es matters of national an@ international im=ort on the
e"onomi" front! @issemination of est =ra"ti"es from #ithin the "ountr> as #ell as from other
nations! the infusion of ne# =oli"> i@eas an@ s=e"ifi" issue$ ase@ su==ort. &1
6.& EMPOWERED GROUP OF MINISTERS EGOM!
05 M is a "olle"ti?e @e"ision making me"hanism #ith =ermanent mem ers. ,n "ase a =oli">
issue reEuires the in?ol?ement of more than one ministr>! a grou= of rele?ant ministers is forme@
#ith the =rime minister s a==ro?al. he mem ershi= "om=osition "hanges #ith the issue at han@.
he o Fe"ti?e of formation of the 05 M is! first to ring the imminent issue into the =oli">
@is"ussion! to ensure etter "o$or@ination among ministries! to refle"t on ?arious as=e"ts relating
to the =oli"> issue! an@ lastl> to eC=e@ite the @e"ision making =ro"ess. here usuall> is one
minister #ho lea@s the grou=. 9i?e energ>$relate@ ministries:
&1 N, , Aa>og! htt=:[email protected]?.inQenQtagQniti$aa>ogQ! A""esse@ on &< Mar"h &
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6.+ MINISTRIAL WEB
Poli"> making an@ im=lementation in the energ> se"tor is s=lit among fi?e ministries! an@ se?eralgo?ernment "ommissions an@ agen"ies. Pre?iousl>! the Ministr> of 0nerg> eCiste@! #ith se=arate
@e=artments for =o#er! "oal an@ non$"on?entional energ> sour"es. hrough national e"onomi"
reforms! the ministr> #as @i?i@e@ into three se=arate ministries in 1''&: the Ministr> of Po#er
(M P) is res=onsi le for the =o#er se"tor along the entire ?alue "hainI the Ministr> of oal
(M ) has res=onsi ilities for =oli"ies on eC=loration an@ @e?elo=ment of "oal reser?esI an@ the
Ministr> of Ne# an@ Rene#a le 0nerg> &MNRE' "arries out national =rogrammes to in"rease
rene#a le in"lu@ing #in@! solar an@ small h>@ro. ,n a@@ition! the Ministr> of Petroleum an@
Natural 5as &MOPNG' o?ersees all as=e"ts of the oil an@ natural gas se"tor! in"lu@ing
eC=loration! =ro@u"tion! marketing an@ im=ortQeC=ort. he De=artment of Atomi" 0nerg>
&DAE'( un@er the @ire"t "harge of Prime Minister! is res=onsi le for all as=e"ts of ,n@ia s nu"lear
=oli"> .&& riti"ism against ha?ing fi?e @ifferent ministries has sti=ulate@ that Gall are ent on to
=rote"ting their narro# turf ! instea@ of a"ting in "onformit> #ith national energ> o Fe"ti?es.
onsi@ering the e?er$in"reasing ne"essit> of forming allian"es to #in ele"tion an@ of re#ar@ing
the =art>$"a@re #ith ministerial =ositions! ho#e?er! the "han"e for one unifie@ energ> ministr> is
remote. hat sai@! in =rin"i=le! ea"h ministr> "an @e@i"ate itself to their @esignate@ fuel se"tor!#ithout eing si@eline@ an@ marginali e@ > other @ominant fuel interests. his =re"on@itions
integrate@ =oli"> =lanning an@ effe"ti?e =oli"> "o$or@ination. A @etaile@ @es"ri=tion of the fi?e
energ>$relate@ ministries an@ state go?ernments is =ro?i@e@ later in relation to their res=e"ti?e
role an@ fun"tion in ea"h fuel se"tor.
6.+.< STATE GOVERNMENTS
he influen"e of the "entral go?ernment on energ> =oli"> at the state le?el is limite@. he ,n@ian
=arliament "annot legislate o?er "ertain as=e"ts of this se"tor in the states. ,n general! as in most
fe@eral s>stems! the states are res=onsi le for im=lementing national la#s! ut "an also issue
state la#s an@ regulations of a==li"ation in their o#n territor>. State go?ernments ha?e their o#n
&&A Dash oar@ for the ,n@ian 0nerg> Se"tor! 0P ! A H R: Ashok Srini#ashtt=:QQ###.e=#.inQ"ommentar>Q@ash oar@$in@ian$energ>$se"tor.html! A""esse@ on &1 Mar"h &
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energ> @e=artments to manage the =arti"ular energ> issues an@ market "on@itions in their states.
hus! state go?ernments ha?e "onsi@era le res=onsi ilities in the energ> se"tor! es=e"iall> in the
=o#er se"tor #here the res=onsi ilit> is share@ et#een the enter an@ the states un@er the
,n@ian onstitution. As a result! the e?olution of =o#er se"tor reforms an@ the le?el of
=enetration of rene#a le energ> sour"es @iffer #i@el> among states. ther relate@ ministries
6.+.1 MINISTRY OF EXTERNAL AFFAIRS
he Ministr> of 0Cternal Affairs &MEA' has e"ome in"reasingl> a"ti?e in energ> se"urit>$
relate@ =oli">. ,n & Di?ision to ser?e as a no@al =oint in the
ministr> for energ> se"urit> an@ to "losel> "o$or@inate #ith the "on"erne@ Ministries an@ su==ort
their international engagement through a==ro=riate @i=lomati" inter?entions &+.
6.+.&MINISTRY OF FINANCE
Res=onsi le for national taCation! finan"ial legislation an@ u@get =lanning an@ allo"ation! the
Ministr> of 9inan"e &MOF' =la>s a signifi"ant role in energ> =oli"> an@ markets. MOF @e"i@es
on the u@get allo"ation for fi?e$>ear =lans! #hi"h @etermine the @ire"tions of energ> =oli">. 9or
instan"e! in the 93 &! ase@ on the energ> su si@> @e"i@e@ >
M PN5! M 9 transfers the su si@> to oil marketing "om=anies in the form of "ash an@ on@s.
M 9 also =ro?i@es fun@ing an@ finan"ial in"enti?es to ?arious rene#a le an@ other energ>
te"hnologies.
6.+.+ MINISTRY OF ENVIRONMENT AND FORESTS
&+ P,B! GNe# Di?ision of 0nerg> Se"urit> ! 7 Se=tem er.
1%
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Ministr> of 0n?ironment an@ 9orests &MOEF' is res=onsi le for the =lanning! =romotion!
"oor@ination an@ o?ersight of the im=lementation of ,n@ia s en?ironmental an@ forestr> =oli"ies
an@ =rogrammes. he role of M 09 is "ru"ial for the @e?elo=ment of infrastru"ture as it has the
authorit> to im=ose a moratorium on =roFe"ts ase@ on their en?ironmental im=a"t. ,n =arti"ular!
the M 09 use@ to @e"i@e on so$"alle@ Ggo an@ Gno$go areas for "oal mining in foreste@ ones.
oal mining @e?elo=ment is =rohi ite@ in no$go areas! resulting in further hin@ran"e to
eC=ansion of "oal =ro@u"tion. he no$go "lassifi"ation #as @ismantle@ o#ing to strong =rotests
from the "oal ministr> an@ in@ustr> in & on Resettlement an@ Reha ilitation (R-R)!
&2 MNR0 (Ministr> of Ne# an@ Rene#a le 0nerg>) (&
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#hi"h reEuires a@eEuate "om=ensation for all in?oluntar> @is=la"ement of =eo=le! #hi"h often
o""urs @ue to energ> an@ infrastru"ture =roFe"ts. taining "learan"e on a "om=ensation =a"kage
is reEuire@ for =roFe"ts! ut states often ha?e @ifferent R-R =oli"ies from that of the entre.
om=ensation @is=utes are har@ to settle #ith lan@ o#ners an@ @#ellers #hose li?elihoo@
@e=en@s on the lan@! hen"e lan@ a"Euisition an@ reha ilitation has e"ome an in"reasingl>
"om=leC =ro"ess. As a result! a num er of =roFe"ts for "oal mining! =o#er =lants! an@ other
larges"ale in@ustr> eC=erien"e@ "onsi@era le @ela>s in their =roFe"t s"he@ule. o fa"ilitate the
=ro"ess! the Lan@ A"Euisition! Reha ilitation an@ Resettlement Bill (LARR) #as =ro=ose@ > the
M RD ut faile@ to =ass in =arliament in &. 9or
instan"e! M S an@ the De=artment of 0nerg> of the nite@ States agree@ to Fointl> fun@ SD
1 R-D entre to fo"us on three =riorit> areas: iofuels! solar
energ>! an@ uil@ing energ> effi"ien"> in &
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Rene
#a le energ> is e"oming an in"reasingl> im=ortant =art of ,n@ia s energ> miC. ith ?ast
=otentials! rene#a le energ> is no longer seen as an alternate energ> sour"e to "on?entional
energ>! ut as a "riti"al element in =ursuit of ke> =oli"> o Fe"ti?es. ,t enhan"es ,n@ia s energ>
se"urit> > @i?ersif>ing its energ> miC an@ re@u"ing im=ort @e=en@en"e on fossil fuels. Solar
=o#er! es=e"iall>! is seen as ha?ing the =otential for ,n@ia =ossi l> to attain Generg>
in@e=en@en"e in the long run . ,n =ro?i@ing energ> a""ess to ,n@ia s =eo=le! rene#a le energ> is
eC=e"te@ to Gsu==lement "on?entional =o#er generation an@ meet asi" energ> nee@s! es=e"iall>
in the rural an@ remote areas . Mitigating "limate "hange is also one of the reasons ,n@ia seeks to
=romote rene#a le energ>! ut not the =rimar> for"e ehin@ it. he share of rene#a le in ,n@ia s
energ> miC! "om ining iomass! h>@ro an@ other rene#a le! #as a==roCimatel> &7J in &
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he 0le"tri"it> A"t & an@ a man@ator> rene#a le =ur"hase o ligation (RP ) for
=o#er utilit> "om=anies! es=e"iall> at the state le?el. his le@ to the intro@u"tion of the
Rene#a le 0nerg> ertifi"ate (R0 ) s"heme in & @istri ution
"om=anies to fulfil their RP > tra@ing the R0 s. ther national =o#er =oli"ies that #ere
man@ate@ > the & in@e te@ state =o#er utilities #ill fa"e "onsi@era le
"hallenges fin@ing fun@s to in?est in their transmission net#ork (su==orte@ > strong go?ernment
initiati?es! rene#a le energ>! mainl> #in@ an@ solar! #ill gro# "onsi@era l> in the near futureI
&&
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A "onsi@era le =ro=ortion of the ,n@ian =o=ulation la"ks a""ess to "lean an@ mo@ern energ>!
im=l>ing that a signifi"ant in"rease of energ> @eman@ is still on the #a>. 0ffe"ti?e rene#a le
energ> =oli"ies! s=e"ifi"all> targeting rural areas! "an hel= ensure that @eman@ is met in a
sustaina le #a>I an@
,n?estment arriers! in"lu@ing a@ministrati?e =ro"esses an@ ina@eEuate su==orting
infrastru"ture! shoul@ e remo?e@ an@ a "learer strateg> is nee@e@! oth to in"rease ,n@ia s
rene#a le "a=a"it> an@ to uil@ a "om=etiti?e rene#a le in@ustr>.
• Linke@ to the first =oint is the attra"ti?eness of u>ing rene#a le energ>. o@a>! #in@ energ>
"osts a out ₹7 an@ solar "osts aroun@ ₹7.6$im=a"tQin@ia$nee@s$an$integrate@$energ>$
=oli">Qarti"le7'&%'7+.e"e ! A""esse@ on &1 Mar"h &
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,n@ia has ha@ a long "ommitment to nu"lear energ> sin"e the esta lishment of the Atomi" 0nerg>
ommission in 1'2% an@ the De=artment of Atomi" 0nerg> in 1'62. ,n@ia #as one of the fe#
"ountries to a"hie?e the "om=lete fuel ">"le from uranium eC=loration! mining! fuel fa ri"ation
an@ ele"tri"it> generation! to re=ro"essing an@ #aste management > the 1'8 is ?ie#e@ #ith strong =ri@e an@ "onsi@ere@ an instrument to a"hie?e Generg>
in@e=en@en"e! Gfossil fuel free future or Gself$suffi"ien"> Ho#e?er! ,n@ia s nu"lear =o#er
"a=a"it> remains small @es=ite "ontinuous "ommitment an@ a@?an"es in in@igenous te"hnolog>.
,n@ia s "urrent nu"lear generation "a=a"it> is 2.% 5 an@ ranks 1+th in the #orl@! #hi"h a""ount
for onl> 1.&J of glo al nu"lear "a=a"it>. &8 he share of nu"lear #as 1J in ,n@ia s total energ>
miC in &
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In*u+,r a */0an* an* /n/rg +u22 0anag/0/n,:
he a?erage ,n@ian uses less energ> than the a?erage hinese or Bra ilian. An@ "ertainl> mu"h
less than the a?erage Ameri"an or "onsumer in other @e?elo=e@ nations. onsi@er this: in & "om=are@ #ith &!7+1 k h use@ > the a?erage hinese an@ 1&!'12 k h >
the a?erage Ameri"an.
0nerg> "onsum=tion is @ominate@ in ,n@ia > the resi@ential an@ in@ustrial se"tors! #ith the
former taking a slightl> larger share of the total energ> =ie (+2J ?ersus ++J for in@ustr>). &%
,n@ustr> uses a thir@ of all ele"tri"it> to run ma"hiner>! among other =ur=oses. Sin"e ele"tri"it>
generation is hea?il> @e=en@ent on "oal! using &&&.1m tonnes of oil eEui?alent (mtoe)! it follo#s
that in@ustr> is a signifi"ant user of "oal (although this "onsum=tion goes e>on@ ele"tri"it>
generation). ,n@ustr> "onsumes more than ' "onsume@ > en@$users su"h ashousehol@s! in@ustr> an@ agri"ulture! eC"lu@ing energ> use@ > the energ> se"tor itself.
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ith @eman@ eC=e"te@ to s=ike o?er the neCt fe# @e"a@es! "om=etition for energ> su==lies is set
to intensif>. A""or@ing to the ,nternational 0nerg> Agen"> (,0A)! energ> @eman@ in ,n@ia from
& esta lishment in
,n@ia treats the threat as a =ossi ilit>! al eit a remote one + of ,n@ia s nu"lear fa"ilities! Mr.
Nara>anasam>! the then Minister of State! Prime Minister s ffi"e! sai@ that Gthough there is nos=e"ifi" se"urit> threat at =resent! De=artment of Atomi" 0nerg> installations an@ its resi@ential
&' Be"ause manufa"turing stra@@les se?eral in@ustrial su $se"tors! it is @iffi"ult to @etermine from a?aila le@ata#hat =ro=ortion of final energ> "onsum=tion > in@ustr> it a""ounts for.
+< Nu"lear Se"urit> in ,n@ia: Ma==ing the hreat S"enario
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"olonies "ontinue to remain =otential targets of outfits an@ elements inimi"al to the interest of
,n@ia.
heoreti"all>! threats to ,n@ia s nu"lear infrastru"ture "an manifest in the form of a full$s"ale
nu"lear @etonationI a G@irt> om atta"kI sa otage at fa"ilities > an insi@erI or an arme@ assaulton a nu"lear fa"ilit>.
A rief ro"hure release@ > the ,n@ian Ministr> of 0Cternal Affairs (M0A) is one of the fe#
=u li"l> a?aila le @o"uments #hi"h =ro?i@es an insight into ,n@ia s nu"lear se"urit> ar"hite"ture.
A""or@ing to the @o"ument! ,n@ia s nu"lear se"urit> a==roa"h is @ri?en > fi?e ke> "om=onents:
5o?ernan"e! Nu"lear Se"urit> Pra"ti"e an@ ulture! ,nstitutions! e"hnolog> an@ ,nternational
oo=eration. hese "om=onents re=resent a goo@ set of "riterion for Fu@ging the state of safet>
an@ se"urit> of ,n@ia s nu"lear materials! though there are =ossi l> other #a>s of @i?i@ing the"ategories for anal>sis. he follo#ing se"tions #ill eCamine these fi?e "om=onents an@ outline
their res=e"ti?e strengths an@ #eaknesses.
W3/r/ 6an ,3/ ,3r/a,+ 640/ 7r408
hreats to ,n@ia s nu"lear esta lishment "an manifest from #ithin ,n@ia s or@ers or from grou=s
ase@ outsi@e the "ountr>. 9rom the insi@e! threats "an "ome =rimaril> from grou=s su"h as the
,M an@ the left$#ing eCtremists (L 0s) or NaCals. hese grou=s! =arti"ularl> the ,M! "oul@
re"ei?e su==ort from eCternal elements to =lan an@ eCe"ute an atta"k on an ,n@ian nu"lear
installation or to @etonate a nu"lear om or RDD.
,n@ian se"urit> agen"ies are of the ?ie# that grou=s su"h as the ,M "urrentl> @o not =ossess the
"a=a ilit> or the "a=a"it> to "arr> out a full$s"ale nu"lear atta"k or RDD atta"k. ra@itionall>! the
,M has een "arr>ing out serial om ings! #hi"h reEuire ?er> little resour"es an@ skills as
"om=are@ to those that are reEuire@ for "arr>ing out a nu"lear or ra@iologi"al atta"k. Moreo?er!
the ,M has ne?er @emonstrate@ the "a=a ilit> to "arr> out "omman@o$st>le rai@s or assaults.
0?en as the ,M la"ks the a ilit> to "arr> out su"h an atta"k! it has sho#n the intent to use a
nu"lear #ea=on on ,n@ian soil shoul@ it a"Euire ne"essar> #here#ithal. A""or@ing to the
statement of one of the ,M s to= lea@ers! 3asin Bhatkal! @uring his interrogation! the ,M ha@ in
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the =ast =on@ere@ o?er the =ossi ilit> of "arr>ing out a nu"lear or ra@iologi"al atta"k #ith
eCternal assistan"e. hile @is"ussing the =ossi ilit> of a"Euiring a small nu"lear om from
Pakistan! Ri>a Bhatkal! another ,M lea@er ase@ in Pakistan! ha@ state@ that Gan>thing "an e
arrange@ in Pakistan. +1 3asin Bhatkal ha@ further tol@ offi"ials that /iya0 told me that attacks
can be done with nuclear bombs. I re1uested him to look for one nuclear bomb for "urat . +&
hile anal>sts argue that these statements @o not refle"t the "a=a ilit> of the grou= to a"tuall>
"arr> out su"h an atta"k! the "onfession highlights the fa"t that the ,M ha@ "onsi@ere@ using a
nu"lear @e?i"e. Su"h a threat "annot e taken lightl>.
hen it "omes to the threat =ose@ > the L 0s to ,n@ia s nu"lear se"urit>! there are @iffering
?ie#s #ithin the strategi" "ommunit>. ne se"tion argues that the L 0s #ill not atta"k a nu"lear
fa"ilit> gi?en that large$s"ale @amage #ill e a "onseEuen"e affe"ting the general =u li". L 0 is
also @ri?en > @ifferent i@eologies! an@ an atta"k on nu"lear fa"ilities or a nu"lear atta"k #ill
onl> hurt their interests.
INDIAN APPROACH TO NUCLEAR SECURITY
G49/rnan6/ an* R/gu a, 4n+
5o?ernan"e in the nu"lear realm is ensure@ through a set of regulations an@ institutions
esta lishe@ in the 1'7
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notifi"ations to eCe"ute the =ro?isions of this A"t. he A"t! sin"e its im=lementation! has
un@ergone amen@ments to strengthen the legal asis for nu"lear se"urit> measures. ,n a@@ition!
there ha?e een a num er of legislations =ertaining to en?ironmental issues among others that
are "riti"al in @etermining the lo"ation an@ o=eration of nu"lear =o#er =lants. hese in"lu@e the
0n?ironment (Prote"tion) A"t! 1'%7! the Atomi" 0nerg> (9a"tories) Rules! 1''7! an@ the
0le"tri"it> A"t! & (Ra@iation
Prote"tion) Rules! 1'81 (#hi"h #ere further re?ise@ in & (Safe Dis=osal of Ra@ioa"ti?e astes) Rules! 1'%8. he Atomi" 0nerg> (Ra@iation
Prote"tion) Rules san"tion a"ti?ities for nu"lear fuel ">"le fa"ilities as #ell as ra@iation use in the
arena of in@ustr>! me@i"ine an@ resear"h. +2 he Rules! after re?ision in & set out roles an@ res=onsi ilities of @ifferent =arties
++ ,ts =re@e"essor #as the Atomi" 0nerg> A"t! 1'2%! #hi"h #as re=la"e@ > the 1'7& A"t. he1'7& A"t is the o?erar"hing legal instrument go?erning nu"lear an@ ra@iologi"al materials an@fa"ilities
+2 Government of Ind !" De#!rtment of Atom $ Ener%&" 'Atom $ Ener%& (R!d !t on Prote$t on)R*+e," - /"0
&'
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in"lu@ing em=lo>ers! Ra@iologi"al Safet> ffi"ers (RS s) an@ others in the area of =rote"tion
against ra@iation. hese rules also s=ell out the =o#ers of the A0RB in the follo#ing #a>s:
Detailing reEuirements regar@ing safet>! health sur?eillan"e of #orkers! ra@iation sur?eillan"e
an@ re"or@s to e maintaine@I issuing @ire"ti?esI ins=e"tionsI an@ enfor"ement a"tions. +6 he
Ra@iologi"al Safet> Di?ision of the A0RB is res=onsi le for ensuring "om=lian"e #ith the & "urrentl> @e?elo=ing the =otential of thorium fuel
">"les . Against the a"k@ro= of the 9ukushima$Daii"hi a""i@ent! ,n@ia argue@ that thorium$
ase@ nu"lear generation is safer than uranium$ ase@! #ith Ga =assi?e "ooling s>stem that
o=erates naturall> if the rea"tor shuts @o#n . Ho#e?er! thorium fuel ">"les ha?e not >et een
full> @emonstrate@ at large s"ale an@ se?eral im=ortant te"hni"al "hallenges remain! =arti"ularl>
in the re=ro"essing of thorium fuel (,0A! & half a "entur> of "ommitment to a
thorium$ ase@ nu"lear =rogramme! ,n@ia is no# entering into the se"on@ stage of o=erating the
fast$ ree@er rea"tor. he feasi ilit> of its ?ision of @e=lo>ing =rotot>=e thorium =lants > &assuming no te"hni"al arriers in the #a>! remains "hallenge@. As su"h! ,n@ia shoul@ "arefull>assess #hat @ifferent roles thorium$ an@ uranium$ ase@ nu"lear energ> "an =la> in resol?ing
short an@ long$term energ> su==l>.
+6 De=artment of Atomi" 0nerg>! Pu li" A""ounts ommittee! Ninetieth Re=ort! GA"ti?ities ofthe Atomi" 0nerg> Regulator> Boar@! su mitte@ to the Lok Sa ha on De"em er
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ANTI-NUCLEAR PUBLIC SENTIMENT
he 9ukushima$Daii"hi a""i@ent resulte@ in gro#ing "on"ern o?er the safet> of nu"lear =lants in
,n@ia. he "onstru"tion of a nu"lear =lant in 4u@ankulam! amil Na@u! rought the issue @ire"tl>
into the =u li" @omain in &e@
o#ing to =u li" =rotestsI resi@ents! rel>ing on fisheries #ithin the ?i"init>! feare@ that the nu"lear
=lant #oul@ @amage the surroun@ing e"os>stem an@ their fishing a"ti?ities! an@ en@anger the
lo"al "ommunit>. he "entral go?ernment offere@ a "onsi@era le "om=ensation =a"kage of
re=orte@l> ,NR 6 illion ( SD '< million) to lo"al areas for infrastru"ture @e?elo=ment +8.
Pu li" fear is not limite@ to nu"lear =lants! ut also in"lu@es "on"erns a out ,n@ia s uranium
mines. ,n & tri al state . +% he =u li" o==osition to nu"lear =o#er #ill most likel> "ontinue
an@ site sele"tion an@ "onstru"tion #ill e"ome e?en more length> an@ "ostl>. herefore! for
nu"lear se"tor @e?elo=ment! the go?ernment must ensure trans=arent an@ thorough safet>
measures an@ effe"ti?e =u li" "ommuni"ation.
%. CHALLENGES: ENERGY SECURITY IN INDIA
,n@ia has eC=erien"e@ im=ressi?e e"onomi" gro#th sin"e its reforms in 1''1. Sin"e that time! the
"ountr> has #itnesse@ a "onsi@era le re@u"tion in =o?ert> an@ ?ast im=ro?ements in the stan@ar@
of li?ing. ,n@ia no# has an e"onom> #ith a @>nami" =ri?ate se"tor an@ a urgeoning mi@@le
"lass! ho#e?er! fa"es gro#ing "hallenges to maintain its e"onomi" gro#th. ,n the first Euarter of
&
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u@get @efi"its! an@ a @e=re"iating "urren">! #i@es=rea@ "on"ern eCists o?er #hether ,n@ia "oul@
see the return of a G1''1$like "risis . +' o re?i?e the ?i ran"> of its e"onom>! a #ell$fun"tioning
an@ finan"iall>$soun@ energ> se"tor is "riti"al to allo# ,n@ia to sustain further e"onomi" gro#th
an@ re@u"e negati?e im=a"ts on its =u li" finan"e. his #ill reEuire an a""elerate@ transition to
an energ> se"tor ase@ on market e"onom>.
he =re?ious "ha=ters sho# t#o maFor tren@s a==earing in ,n@ia s o?erall energ> se"tor: first! a
serious energ> shortage a"ross @ifferent fuel se"tors! ranging from "oal! gas! an@ oil to uranium.
he @efi"ien"> of these fuels is resulting in a "onsi@era le shortage of ele"tri"it>! #hi"h ham=ers
e"onomi" an@ so"ial @e?elo=ment. Se"on@! there is an in"reasing nee@ to im=ort more energ> as
a result of the "ountr> s stagnating @omesti" =ro@u"tion. ru@e oil use@ to e the main energ>
im=ort! ut ,n@ia no# nee@s to im=ort greater ?olumes of "oal an@ gas as #ell. Ho#e?er! @ue to
"onsi@era le @is=arit> et#een @omesti" an@ international =ri"es for these fuels! a"tual im=orts
might not take =la"e! or #ill take =la"e to a lesser @egree then the a"tual fuel shortage might
reEuire. Moreo?er! in"reasing fuel im=orts #ill ha?e negati?e im=li"ations on ,n@ia s finan"ial
"on@ition. o effe"ti?el> a@@ress these t#o tren@s! ,n@ia nee@s a fun"tioning energ> market! in
other #or@s! a s>stem #here national energ> @eman@ "an e met > timel> an@ a@eEuate
in?estment in a sustaina le #a> an@ usiness entities o=erating in the energ> market are
"ommer"iall> ?ia le. 2< SiC maFor "hallenges! #hi"h nee@ to e resol?e@ to "reate a fun"tioning
energ> market: =la>ers! =ri"ing! in?estment! im=lementation! =oli"> an@ =oliti"al #ill. hese
"hallenges shoul@ e a@@resse@ urgentl> > ,n@ian =oli"> makers! as the @eteriorating energ>
situation "an seriousl> #eaken the "ountr> s =ros=e"ts for a ro ust national e"onom> an@
im=ro?e@ @ail> life of its "iti ens.
8.1 PLAYERS
he "a=a ilit> of in@i?i@ual =la>ers to "arr> out their usiness o Fe"ti?es is as im=ortant as the
o?erall usiness stru"ture that sha=es an@ limits the s"o=e of their o=erations. his #as #elleC=resse@ > =rominent ,n@ian energ> eC=ert! Professor RaFen@ra Pa"hauri! G uil@ing lo"ks of
+' "upra Note At 1&.
2< n@erstan@ing 0nerg> hallenges of ,n@ia: Poli"ies an@ ,ssues! ,nternational 0nerg>Agen">!&
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the energ> se"tor! namel> the enter=rises =ro@u"ing ele"tri"it>! =etroleum =ro@u"ts or other forms
of energ> ha?e to e u=gra@e@ to health> an@ ?i rant usiness entities . 21 A num er of "ore
"om=eten"ies nee@ to e im=ro?e@ for ,n@ia s energ> =la>ers.
8.& FINANCIAL CAPACITY
his is the most im=ortant "a=a"it> reEuire@ for =la>ers to fulfill their =rimar> usiness o Fe"ti?e
@eli?ering energ> =rofita l> to "onsumers. Ho#e?er! man> of ,n@ia s energ> =la>ers suffer from
finan"ial #eakness! #ith limite@ finan"ial resour"es an@ restri"te@ in?estment a ilit>. here are
t#o "ategories of "om=anies in this regar@. 9irst! there are "om=anies that are in @e t @ue to the
institutional "om=ulsions o?erri@ing their usiness interests. ne eCam=le is the state ele"tri"it>
@istri ution "om=anies that are o lige@ to suffi"ientl> "om=ensate through @ire"t transfers from
state go?ernments. At the same time! finan"ial #eakness is @eri?e@ from s>stemi" failure to
enfor"e legitimate re?enue "olle"tion. he @eteriorating finan"ial status of state has een one of
the gra?e "on"erns for =o#er =ro@u"ers an@ fuel im=orters as it "alls into Euestion #hether the>
#ill a"tuall> re"ei?e =a>ments for their ele"tri"it>. Another eCam=le are oil marketing "om=anies
( M s)! #ho sell "ertain =etroleum =ro@u"ts at go?ernment regulate@ =ri"es! at #hi"h the>
"annot re"o?er their "osts. 2& Although M s generate =rofits on their alan"e sheet! #ithout
@is"ounte@ "ru@e =ur"hases from go?ernment$o#ne@ u=stream "om=anies an@ go?ernment
grants an@ oil on@s! their usiness a==ears to make losses. he se"on@ "ase is #hen usinessentities are =rofita le ut un@er=erforming. he u=stream "om=anies in the oil an@ "oal se"tors
are a "ase in =oint. N5 ! ,L an@ ,L all sell their =ro@u"ts at a mu"h lo#er =ri"e "om=are@ to
international =ri"es in or@er to kee= the en@$use =ri"es lo#. 2+ ,n the short term! sa"rifi"ing these
"om=anies =otential =rofits "an make sense to "ur inflationar> effe"ts an@ =ro?i@e affor@a le
energ> to the ,n@ian =eo=le. But in the longer term! the la"k of suffi"ient in?estment > these
"om=anies @ue to insuffi"ient finan"ial resour"es "oul@ Feo=ar@i e the relia le energ> su==l> to
the nation.
21 Pa"hauri! R 4 ! GSe"uring ,n@ia s 0nerg> 9uture ! he ,n@ian 0C=ress! 2 August.
2&A Dash oar@ for the ,n@ian 0nerg> Se"tor! 0P ! A H R: Ashok Srini#ashtt=:QQ###.e=#.inQ"ommentar>Q@ash oar@$in@ian$energ>$se"tor.htmlI A""esse@ on && Mar"h &
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8.+ MANAGEMENT AUTONOMY
,n@ia s energ> se"tor is @ominate@ > =u li" se"tor "om=anies or PS s (o#ne@ > the "entral
an@ state go?ernment). Base@ on a similar o?er?ie# on o#nershi= ma@e in the ! some =arts of the
energ> se"tor ha?e ma@e ?er> little =rogress in attra"ting =ri?ate in?estment sin"e As PS s are
o#ne@ an@ su=er?ise@ > the go?ernment! the> ha?e rather limite@ autonom> o?er management
an@ in?estment @e"isions. 22 he s=lit goal et#een =oliti"al =riorit> an@ "ommer"ial interest
often "reates "onfusion in the roles an@ fo"uses of PS s. 9or instan"e! gasoline =ri"es #ere
offi"iall> @eregulate@ in &
"onsultation. 9urthermore! there ha?e een "ases in #hi"h PS s faile@ to @eli?er timel>
in?estment @e"isions! #hile #aiting for go?ernment a==ro?al. ne of the =ro lemati" areas is
o?erseas u=stream in?estment for oil an@ gas resour"es. N5 Q L nee@s a go?ernment
a==ro?al for in?estment @e"isions a o?e a "ertain threshol@ #hi"h is not al#a>s re"ei?e@ in a
timel> manner. he threshol@ of ,NR + illion ( SD 66 million). 26
9inall>! no management me"hanism eCists to =enalise "om=anies for un@er=erforming or
rea"hing usiness "ontra"ts! in"lu@ing the fuel su==l> agreement. Nor are suffi"ient in"enti?e
measures in =la"e. o uil@ o=erational a""ounta ilit> an@ autonom> #ithin the "om=an>! a more
22 "upra Note At &2.
26 o#ar@s a sustaina le energ> future: realities an@ o==ortunities! ./S R. M! L>n@a Armstrong.
+2
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strategi" human resour"e management me"hanism! in"lu@ing an internal =romotion an@ re#ar@
stru"ture shoul@ e a@o=te@ in =u li" enter=rises. 27 A =ro=er se=aration of o#nershi= an@
management "an enhan"e the "or=orate autonom> that is reEuire@ to make in?estment @e"isions
ase@ on "ommer"ial assessment at an o==ortune moment. is small "om=are@ to the si e of a
t>=i"al @eal in the glo al u=stream se"tor ( ,! &s ?ia le an@ generates a@eEuate finan"ial resour"es for in?estment! an@ at the same
time! su si@ies shoul@ e @ire"tl> "hannele@ to those #ho are in nee@. 28 he =ri"ing me"hanism
nee@s to e rationalise@ holisti"all>! as the "urrent me"hanism has the alloon effe"t of shifting
@istortion from one se"tor to another along the entire energ> ?alue "hain. 9urthermore! a =ro=er
enfor"ement me"hanism for re?enue "olle"tion is un@ou te@l> "ru"ial! as sho#n in the =o#er
se"tor #here institutional failure to @eter an> illegitimate =o#er usage an@ to a"tuall> "olle"t the =a>ments from "onsumers results in near$insol?en"> of state utilities. ,t #as re=orte@ that the
go?ernment is "onsi@ering gi?ing N5 i@esh =o#ers to @e"i@e in?estments of u= to ,NR +<
illion. 2% Ho#e?er! it has not een offi"iall> announ"e@.
%.$ RIGID TARIFF SETTING MECHANISM
heoreti"all>! energ> =ri"es shoul@ e su=er?ise@ an@ a@Fuste@ in a timel> manner an@
a@eEuatel> > in@e=en@ent regulators to refle"t "hanging "osts. Ho#e?er! in ,n@ia! regulators
27 , i@.
28 ,n@ia s 0nerg> Se"urit>: An ?er?ie#! SSRN. omI RaFen@ra 4on@a=ati.
2%,n@ia s 0nerg> Se"urit>: An ?er?ie#! SSRN. omI RaFen@ra 4on@a=ati.
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in"lu@ing 0R an@ S0R s o=erate in a ?er> rigi@ #a> @ue to =oliti"al "onsi@erations. his
Feo=ar@ises the o=erational =rofita ilit> of "om=anies.
,n the =etroleum an@ gas se"tor! #here there is no in@e=en@ent regulator an@ =ri"es are set >
go?ernment! =ri"e "hanges a==ear to e e?en more rigi@. Des=ite a "onsi@era le in"rease of theinternational "ru@e =ri"e! ,n@ia s retail =ri"es for these four =ro@u"ts ha?e een a@Fuste@ ?er>
marginall> > the go?ernment! es"alating the re?enue losses to M s. hen it "omes to those
offi"iall> @eregulate@ se"tors in"lu@ing gasoline an@ "oal! =ri"es are also @e fa"to @etermine@ >
the go?ernment through its o#nershi= of oil an@ "oal PS s. he a ilit> to =ass on the flu"tuating
fuel "osts in a timel> manner to the =o#er tariffs is =arti"ularl> im=ortant to ensure in?estment in
u=stream "oal an@ gas se"tor as #ell as in LN5 im=ort infrastru"ture. onsi@ering that ,n@ia is a
=ri"e taker in the international energ> market! a fleCi le =ri"ing me"hanism is also essential to
in"rease the a""e=ta ilit> of greater im=orts of these fuels. 9urthermore! the infleCi le =ri"ing
me"hanism has le@ to @istortion of fuel "hoi"es > "onsumers. 9or instan"e! su si@ise@ fuel like
kerosene an@ @iesel result in artifi"iall> high "onsum=tion an@ im=e@e the in?estment in "leaner
energ> that is more "ostl>. 2'
%.) INVESTMENT: MAKE IN INDIA MISSION"
2' , i@.
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Pri?ate in?estment in ,n@ia has stea@il> in"rease@ sin"e the li eralisations of the =o#er! oil an@
gas se"tors. Ho#e?er! @es=ite some of the =ositi?e "hanges that =ri?ate in?estment rought to
,n@ia s energ> se"tor! this a"hie?ement is a half su""ess. Most of the maFor international
"om=anies are still relu"tant to in?est in ,n@ia s energ> se"tor. 9D, in "ommo@it> eC"hanges !
sto"k eC"hanges - @e=ositories! =o#er eC"hanges! =etroleum refining > PS s! "ourier ser?i"es
un@er the go?ernment route has no# een rought un@er the automati" route .6<
,n@ia nee@s "onsi@era le in?estment to uil@ a relia le an@ a@eEuate energ> su==l> "hain. his is
es=e"iall> ne"essar> to =ro?i@e mo@ern energ> to the large =ro=ortion of the ,n@ian =o=ulation
#hose energ> @eman@ is "urrentl> unmet.
%.%SUSTAINABLE DEVELOPMENT
As in the rest of the #orl@! in?estment in a@?an"e@ an@ "lean te"hnolog> is reEuire@ to set ,n@ia s
energ> future on a sustaina le =ath. ,n@ia is fa"ing rising en?ironmental =ro lems. ith falling
gas =ro@u"tion an@ faltering nu"lear "a=a"it>! ,n@ia s =o#er generation is in"reasingl> @e=en@ent
on "oal$ ase@ "a=a"it>! #hi"h is less effi"ient an@ more "ar on$intensi?e "om=are@ to other
fuels. Also the #i@es=rea@ "onsum=tion of iomass results in en?ironmental @eterioration
in"lu@ing @eforestation an@ air =ollution! #hi"h "oul@ e alle?iate@ > =ro?i@ing a""ess to an@
en"ouraging "onsum=tion of more effi"ient an@ mo@ern energ> .61 0nerg> infrastru"ture usuall>
6< Make ,n ,n@ia! htt=:QQ###.makeinin@ia."omQ=oli">Qforeign$@ire"t$in?estmentQ! A""esse@ on&& Marh & Poli"ies in ,n@ia: An Assessment of the ,m=e@iments! A H R: Meenal /ainet. Al.
+8
http://www.makeinindia.com/policy/foreign-direct-investment/http://www.makeinindia.com/policy/foreign-direct-investment/http://www.makeinindia.com/policy/foreign-direct-investment/http://www.makeinindia.com/policy/foreign-direct-investment/http://www.makeinindia.com/policy/foreign-direct-investment/
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has a ?er> long life$">"le. hus! it is "riti"al for ,n@ia to no# in?est in state$of$the$art! lo#$
"ar on te"hnolog> for its energ> se"torI other#ise! ,n@ia s energ> se"tor "oul@ e lo"ke@ into a
"oal @e=en@ent an@ higher than ne"essar> "ar on$intensi?e =ath. 6& Po#er an@ other energ> tariffs
shoul@ e rationalise@ to =romote sustaina le in?estment.
%. IMPLEMENTATION
,n@ia has @emonstrate@ an a ilit> to Eui"kl> a@@ress =ressing issues! an@ @e?ise =oli"ies an@ set
targets. Ho#e?er! for a"tual =oli"> im=lementation! ,n@ia la"ks a "lear strateg> an@ a"tion =lans.
G here has een little in@i"ation of ho# =oli"ies shoul@ e =rioriti e@! no =lan for fun@ing them!
an@ often a ga= et#een =oli">making an@ im=lementation . hat s more! go?ernment
initiati?es often en@ u= eing announ"e@ an@ not follo#e@ u=. 9or instan"e! ,n@ia announ"e@ the
"reation of a so?ereign oil fun@ to su==ort o?erseas u=stream in?estment in & =rogress has een ma@e to @ate .6+
%.; BUREAUCRACY
A slo# an@ length> =ro"ess to o tain lan@ a"Euisition =ermits! en?ironment "learan"e! an@ other
statutor> "learan"es has een i@entifie@ as the maFor arrier for im=lementing energ> an@
infrastru"ture =roFe"ts. learl>! those statutor> "learan"es are ne"essar> to =rote"t the
en?ironment an@ lan@ rights! ut the> nee@ to e streamline@ > remo?ing re@ ta=e to assure thein$time "om=letion of =roFe"ts. Man> ke> energ> an@ infrastru"ture =roFe"ts ha?e not =rogresse@
e>on@ this stage @ue to the lagging a@ministrati?e =ro"ess. 9urthermore! eC"essi?e re@ ta=e is a
serious o=erational an@ finan"ial risk that @is"ourages =ros=e"ti?e in?estment. 0?entuall>! this
#oul@ "onstrain ,n@ia s a ilit> to su==l> energ> in "oming >ears.
%.1 INTER-MINISTERIAL COORDINATION
6&"upra Note At +1.
6+ "upra nota At +&.
+%
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9or effe"ti?e im=lementation! hori ontal "oor@ination among @ifferent ministries nee@s to e
im=ro?e@! es=e"iall> taking the a sen"e of single unifie@ energ> ministr> into "onsi@eration. At
the to= le?el! there is alrea@> an inter$ministr> "oor@ination me"hanism in =la"eI ho#e?er!#orking$le?el "oor@ination "an e im=ro?e@ throughout the entire =oli">making an@
im=lementation =ro"ess. An@ this "oor@ination shoul@ e @one in a regular an@ institutionalise@
manner! rather than on a s=ora@i" an@ =ersonal asis. 9urthermore! institutional me"hanism to
re"on"ile @ifferent interests an@ ?ie#s of ?arious ministries are "ru"ial. ften! ministries @isagree
o?er a =arti"ular issue! #hi"h takes long to resol?eI for instan"e! it took nearl> three >ears for the
M P an@ M to rea"h an agreement! al eit still negotiating! on the "oal su==l> "ontra"t for
=o#er =lants. At the same time! the M an@ M P fin@ themsel?es freEuentl> in @isagreement
#ith the M 09 o?er the en?ironment "learan"e =ro"ess. o settle the gas =ri"ing issue for N0LP
su==lies! the M P an@ M PN5 #ent through a te@ious gri@$lo"k until a @e"ision #as ma@e >
the High ourt. 62 9inall>! inter$ministerial "oor@ination shoul@ e a==roa"he@ in terms of roa@er
national interests! #hi"h are often o?erlooke@ in =ursuit of in@i?i@ual o Fe"ti?es > ea"h
ministr>.
%.11 INTER-GOVERNMENTAL COORDINATION
62 , i@.
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,n ,n@ia s fe@eralist =oliti"al s>stem! ?erti"al "oor@ination et#een the "entral go?ernment an@
state go?ernments is "ru"ial to im=lement =oli"ies. he "entral go?ernment makes =lans an@
=ro?i@es fun@ing! ut most of the time! it is the state go?ernments that a"tuall> eCe"ute the =lansan@ im=lement the =roFe"ts. 9or instan"e! although the 0le"tri"it> A"t &et to @o so. Re"entl>! MNR0
"alle@ for the 0C=ression of ,nterest for re?ie#ing state Solar RP an@ R0 s! #hi"h #oul@ e
highl> ?alua le to assess status Euo of state rene#a le =oli"> im=lementation. 66 But there #oul@
e ?er> limite@ s"o=e for MNR0 to enfor"e the im=lementation of these initiati?es at state le?el.
,nter$go?ernmental "oor@ination is also im=ortant to alle?iate the gro#ing im alan"e among
states in terms of energ> infrastru"ture an@ in?estment. he regional "on"entration of energ>"a=a"it> in a fe# states risks =er=etuating the une?en e"onomi" @e?elo=ment a"ross the nation.
he "entral go?ernment nee@s to "losel> #ork #ith state go?ernments to a@@ress this issue an@
ensure that an in?estment$frien@l> en?ironment "an e "reate@ in those less @e?elo=e@ states.
%.1! TRULY INTEGRATED ENERGY POLICY
he 5o?ernment s Bu@get shoul@ fo"us on a ig =i"ture =lan that "an fun@amentall> transform
the traFe"tor> of ,n@ia s e"onom> an@ the fortunes of 1.& illion =eo=le. he "ountr> nee@s an
integrate@ energ> =oli"> an@ the 5o?ernment elie?es the solution ma> lie in a ig thrust on
rene#a le energ> for #hi"h massi?e targets ha?e een set. he 5o?ernment has set an am itious
target of 1
u= from the "urrent installe@ "a=a"ities for oth #in@ an@ solar ne of the easiest #a>s of @oing
66 "upra Note +&.
2
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that is > re@u"ing the finan"ing "ost. Po#er =ro@u"ers are still orro#ing at an interest rate of
1&$1+ =er "ent an@ this nee@s to mo?e @o#n to %$' =er "ent. ,f the 5o?ernment "an @o this! then
the "ost of rene#a les #ill "ome @o#n an@ e "om=ara le to #here "on?entional =o#er is. 67
hat is reall> nee@e@ is a "learl> s=elt$out roa@ ma= of the @ire"tion that the 5o?ernment #ants
to take for the se"tor.
POLITICAL WILL
o su""essfull> "o=e #ith the fi?e "hallenges @is"usse@ earlier! =oliti"al #ill is a =rereEuisite.
Meeting these "hallenges an@ transforming ,n@ia s energ> se"tor into a fun"tioning market
reEuires "ontinue@ an@ unite@ =oliti"al lea@ershi= from =oli"> makers. ,n@ia s "urrent =oliti"al
"ulture! #hi"h is ase@ on fragmente@ =oliti"al interest an@ multi$=art> "oalition go?ernment!
makes this rather @iffi"ult. Ho#e?er! the energ> se"tor is too im=ortant to e "om=romise@ >
67 "upra Note At &6.
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=oliti"al interest an@ rent$seeking eha?iour. Bi=artisan "onsensus on energ> =oli"> shoul@ e
sought in the national interest.
%.1" DELAYED REFORMS
ith the LAAR amen@ment a"t! an@ "urrent go?ernment intent to attra"t maCimum =ossi le
foreign in?estment! an@ some states la#s are #el"ome ste=s to#ar@s se"uring ,n@ia s energ>
se"tor. hough there has een some @ela> ut its ne?er too late to start o?er.
8.12 PUBLIC COMMUNICATION
Pu li" "ommuni"ation is an im=ortant! strategi" "om=onent of the im=lementation of ne# energ>
=oli"ies. 5i?en rising =u li" a#areness on en?ironmental an@ health issues! an@ a gro#ing!
in"reasingl> "ons"ientious! ,n@ian mi@@le "lass! =u li" "ommuni"ation strategies "an =la> a
"riti"al role in @isseminating kno#le@ge an@ generating =u li" "onsent. he @e?elo=ment of a
ne# energ> infrastru"ture entails si a le lan@ reEuirements that "an ha?e an en?ironmental
im=a"t on the lo"al "ommunit>I this is =arti"ularl> the "ase for nu"lear =lants! as #ell as "oal an@
uranium mines. Pu li" "ommuni"ation is also im=ortant for ne"essar>! ut un=o=ular! =oli">
@e"isions in"lu@ing fuel =ri"e in"reases! #hi"h "an ha?e a @ire"t im=a"t on the @ail> li?es of
,n@ian "iti ens. ,t is! therefore! "ru"ial to effe"ti?el> an@ "ontinuousl> "ommuni"ate #ith the
,n@ian =u li" on the intention an@ im=ortan"e of su"h =oli"> mo?es! es=e"iall> against the a"k@ro= of ,n@ia s in"reasing im=orts from the glo al energ> market. 68
At the same time! =oli"> makers an@ =oliti"ians shoul@ e "autious a out the =otential
"onseEuen"es of their =o=ulist messages. Rhetori"al statements! su"h as Gfree ele"tri"it> an@
Gfossil fuel free future ! not onl> raise unrealisti" eC=e"tations a out ,n@ia s energ> situation! ut
un@ermine the #orka ilit> of ne"essar> energ> se"tor reform. Poli"> makers! through effe"ti?e
=u li" "ommuni"ation! shoul@ "on?e> the right messages to the ,n@ian =eo=le
. CONCLUSION
68 , i@.
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A serious energ> shortage an@ gro#ing =ressure on im=orts ha?e een seen in the ,n@ian energ>
se"tor. ,n the mi@@le of & se"tor! ,n@ia is no# stan@ing at the "rossroa@s
#ith a nee@ for the neCt =hase of energ> se"tor reform. Strong =oliti"al lea@ershi= is ?ital to
a@@ress energ> "hallenges. Pu li" =er"e=tion shoul@ e shifte@ to a""e=t that energ> is not an
entitlement! ut a "ommo@it>. 0nerg> su==l> "annot e taken for grante@! an@ it reEuires
suffi"ient resour"es to e @eli?ere@ to "onsumers. ,n@ia s =oli"> o Fe"ti?e of in"lusi?e
@e?elo=ment an@ affor@a le energ> shoul@ e maintaine@! ut usiness ?ia ilit> "annot e
sa"rifi"e@ in the =ro"ess. his =er"e=tion is the foun@ation of a fun"tioning energ> market an@the sustaina le! green gro#th e"onom> that ,n@ia =ursues.
,n@ia is un@ou te@l> an@ irre?o"a l> integrate@ into the glo al energ> market. ,t relies on
signifi"ant amounts of energ> from foreign sour"es an@! as su"h! ,n@ia is a =ri"e taker! not a =ri"e
setter. ,n@ia "an re@u"e its ?ulnera ilit> to energ> =ri"e flu"tuation through a fleCi le an@
"om=etent energ> market! ut it "annot isolate itself from =ri"e ?olatilit>. At the same time! to
eC=an@ its energ> su==l> "a=a"it> to meet the ra=i@l> gro#ing energ> @eman@ of its =eo=le!
,n@ia nee@s more in?estment. A signifi"ant =ortion of the reEuire@ in?estment must "ome from
foreign in?estors! for #hom it "om=etes #ith other "ountries. his im=lies the ne"essit> of
integrating ,n@ia s energ> institutions an@ =oli"ies #ith glo al =ra"ti"es.
9inall>! energ> "hallenges shoul@ "ome efore =oliti"al interests. As the father of ,n@ia s nu"lear
energ>! Dr. Bha ha! on"e =ut! Gno =o#er is as eC=ensi?e as no =o#er. A relia le an@ a@eEuate
su==l> of mo@ern an@ "lean energ> is the =rereEuisite for ,n@ia s "ontinue@ e"onomi"
@e?elo=ment. Nothing #oul@ e more "ostl> than the @isru=tion of the national e"onom>! #hi"h
has so mu"h =otential to =ros=er! as #ell as the @isru=tion of @ail> a"ti?ities of the ,n@ian
"iti ens! #ho are rea@> to =arti"i=ate in another e"onomi" mira">.
;. BIBLIOGRAPHY
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