Why is India on the verge of an unusual power crisis

India, the world’s largest democracy is on the verge of experiencing an unprecedented power supply crisis for one simple reason- the country is falling excessively short on coal. India’s 70% of the electricity is generated using coal and the power minister has already declared that the shortage this time is beyond normal.

Now, this coal shortage is a major cause for concern for a country that has just started to get on its feet after a crisis and has the potential to derail the post-pandemic economy recovery, not to mention the inconvenience it will cause to the public in general.

In this article, we will attempt to analyse the reason behind this potential power crisis, its impact and solutions if any.

Why can there be a power crisis?

We have already discussed that the prime reason is the coal shortage in the country but what needs to be understood is that it’s not a sudden setback, but the crisis has been in making for months.

Also Read: Why is India facing a coal shortage

As the world’s and India’s economies gradually unlocked post the deadly second wave, the demand for energy resources, coal being the primary in our case, rose dramatically. 

According to BBC, India’s power consumption in the last two months alone rose by almost 17%, compared to the same period in 2019. During the same time, global coal prices skyrocketed by 40% and India, which is the world’s second-largest importer of coal, had to lower its import.

Power plants that usually rely on imports are now heavily dependent on Indian coal, adding further pressure to already stretched domestic supplies, which is likely to result in a massive power crisis.

What will be the implications?

According to experts, importing more coal to make up for domestic shortages is not an option at present as the global coal prices are already at an all-time high.

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However, if the shortage continues, a surge in the cost of electricity will start burdening end consumers and this is when the retail inflation is already high as everything from oil to food has become more expensive.

As per Zohra Chatterji, the former Chief of Coal India Limited, if this situation persists, Asia’s third-largest economy will struggle to get back on track.