Lauding the efforts of the government for the right pace in achieving the goals of Paris Climate Change agreement, the Economic Survey 2017 emphasised the urgent need to shift focus towards sustainable energy access for the deprived. While the Survey supported the renewable energy growth in the country, it also warned against the several perils of too much renewable.
It said the social cost of renewable energy was thrice that of coal at Rs 11 per unit. This, it said is imperative to be noted as India progresses aggressively in renewable energy capacity addition so as to not burden the consumers.
“While investments in renewable energy is crucial for India to meet its climate change goals, such investment be made at a calibrated pace looking into the total cost accrued to the society,” it said.
The Survey highlighted the detrimental effect of growing renewable over coal based capacity and rising NPAs in the same. It said high amount of renewable would render a part of the assets in conventional energy generation plants idle or result in them being used at a much lower level capacity.
“The stranding of assets can have implications for the banking system depending on their exposure to the sector. In a situation where the banking system is already facing a stressed assets problem, stranding of assets could have considerable impacts,” it said.
The CEA noted that 49 per cent of households still use firewood for cooking and similar is the case with access to electricity. “Access to energy is intertwined with the various other economic and social developmental objectives such as poverty alleviation, health, industrialisation, education, provision of communication infrastructure, and climate change mitigation among others,” said the CEA in the chapter titled Climate Change, Sustainable Development and Energy in Economic Survey-II.
The Survey noted several schemes of the government are helping in improving the situation. Pradhan Mantri UJJWALA Yojana for LPG distribution, Pratyaksh Hastantrit Labh (PAHAL) scheme for direct transfer of LPG subsidies and Deen Dayal Upadhyaya Gram Jyoti Yojana for rural household electrification were hailed as successful initiatives.
It also said that to ensure 100 per cent energy access to its population and bridge the 'development deficit gap', all cleaner energy sources need to be tapped.
The Survey noted that the NPA ratio pertaining to electricity generation was around 5.9 per cent of total advances (outstanding) of Rs 4,73,815 crore. The total advances to coal sector were Rs 5,732 crore with an NPA ratio of 19.8 per cent.
The Survey said while multilateral climate regime would do well if financial resources were provided to assist developing countries to facilitate the pathway towards low greenhouse gas emissions and climate resilient development. “In this regard, India underscores the importance of an increase in the volume, flow and access to finance alongside improved capacity and technology for developing countries.”
Extreme weather events cost India losses of about $9-10 bn
Estimates indicate that currently, India incurs losses of about $9-10 billion, annually, due to extreme weather events, the Economic Survey noted. Of these, nearly 80 per cent of losses remain uninsured. From 2014-15, natural catastrophe (NatCat) losses for Indian insurance companies were estimated at $11 billion.
The low insurance penetration in India is also visible from the data from recent calamities. For example, the total losses due to floods in Kashmir in 2014, caused by unprecedented rains, were declared officially to be in excess of Rs 100,000 crore (approx. $15 billion), insurance companies were required to pay around Rs 4,000 crore (approximately $610 million) according to a High Court directive, due to the low insurance coverage. In another instance, while total losses from 2014 Cyclone Hudhud reached $11 billion, only $650 million was insured.
The low insurance penetration in India is also visible from the data from recent calamities. For example, the total losses due to floods in Kashmir in 2014, caused by unprecedented rains, were declared officially to be in excess of Rs 100,000 crore (approx. $15 billion), insurance companies were required to pay around Rs 4,000 crore (approximately $610 million) according to a High Court directive, due to the low insurance coverage. In another instance, while total losses from 2014 Cyclone Hudhud reached $11 billion, only $650 million was insured.