NEW DELHI: India’s electricity demand is expected to be higher year-on-year in the fourth quarter of the current fiscal, India Ratings and Research said in a report.
This assumes importance as energy consumption, especially that of electricity and refinery products, is typically linked to overall demand in the economy. This also comes at a time when India’s gross domestic product (GDP) growth is estimate have been revised upwards by ratings agencies.
In its Global Economic Outlook, Fitch revised India’s economic growth estimate to 12.8% for FY22, on the back of a stronger carryover effect, a looser fiscal stance and better virus containment. Also, Moody’s Analytics has said India’s GDP is projected to grow 12% in 2021.
“The all-India energy demand is expected to be higher in 4QFY21 on a yoy basis, despite partial lockdowns in some of the states on account of an increase in COVID 19 cases," the report released on Friday said.
Given a resurgence in covid-19 cases in several parts of the country, the central government on Wednesday asked states to impose local restrictions ahead of upcoming festivals in India.
"In February 2021, the all-India energy demand increased 0.2% yoy to 104.6 billion units (January 2021: up 5.0%; December 2020: up 4.9%)," the report said.
This comes in the backdrop of India’s electricity demand recording a new high of 189.6 gigawatts (GW) in January. The country has an installed power generation capacity of 373.43GW.
“The energy demand over April 2020-February 2021 was lower by 2.8% on a yoy basis (9MFY21: down 3.9% yoy; 1HFY21: down 8.7% yoy; 1QFY21: down 15.9% yoy)," the report added.
The Indian economy has been severely hit by the coronavirus pandemic. The country’ peak electricity demand slumped as commercial and industrial power demand took a hit after many factories shut down. However, the demand is back now.
“The short-term power price at Indian Energy Exchange continued its improving trend on a yoy basis with the prices breaching INR4/unit in March 2021 for the first time since October 2018," the report said.
Battered by the pandemic, the Indian economy is projected to contract 8% in FY21, in its worst show in more than four decades.
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