Indian and Japanese executives discuss energy strategy.
The ongoing conflict in West Asia is more than just a geopolitical flashpoint; it’s a stark reminder of India’s energy vulnerabilities, according to Axis Bank Chief Economist Neelkanth Mishra. But with challenge comes opportunity. Mishra argues that this crisis could be the catalyst India needs to enact critical reforms in its energy sector.
Mishra, also a member of the Prime Minister’s External Advisory Council, highlights a key paradox: Indian households and farmers enjoy some of the world’s cheapest electricity, while industry grapples with the highest costs. This imbalance, he says, is a drag on economic growth.
The solution? Correct energy pricing. Mishra advocates for reforms that boost efficiency, drawing inspiration from Japan’s post-1970s oil shock transformation. Japan now generates four times the GDP per unit of energy compared to India. Proper pricing, he argues, is crucial for job creation, empowering people to afford power and reducing reliance on free electricity.
However, inaction could have dire consequences. Mishra warns that a sustained rise in crude oil prices to $110 per barrel could send the Indian rupee plummeting to Rs 100 against the dollar. This makes energy reform not just desirable, but essential for India’s economic stability.
About the Author
