At a time when prices for fossil fuels are going down, India is working hard to embrace renewable energy. The challenge is amplified with the current situation of power grid (which requires a massive overhaul) and also the financial snags associated with it.
The government says India has a renewable energy potential of around 900GW, but for achieving the green dream, clarity in policy making is needed. Further, there is a need to effectively utilize the National Clean Energy Fund by allotting certain funds to various state DISCOMs to improve their financial status and by investing more into the research and development.
A significant catalyst for pushing RE has been the decreasing cost of solar energy technology.
As a positive sign, the investors are also seeing a great opportunity in India’s emerging green economy. However, the market framework needs to be refurbished to accommodate the change in the share of renewable energy in India’s energy mix.
India’s energy import bill of around $150 billion is expected to reach $300 billion by 2030. On the other hand, the country is aiming to bring a 10% cut in energy imports by 2022, and a 50% cut by 2030. The boost in RE energy is expected to facilitate the accomplishment this aim.
In the long run, India is heading towards a cleaner future while trying to keeping up with the UN Sustainable Development Goals.
The impact of ten years of gradualist economic reforms in India on the policy environment presents a mixed picture.
The industrial and trade policy reforms have gone far, though they need to be supplemented by labor market reforms, which are a critical missing link.
The logic of liberalization also needs to be extended to agriculture, where numerous restrictions remain in place. Reforms aimed at encouraging private investment in infrastructure have worked in some areas, but not in others. The complexity of the problems in this area was underestimated, especially in the power sector. This has now been recognized, and policies are being reshaped accordingly. Progress has been made in several areas of ?nancial sector reforms, though some of the critical issues relating to government ownership of the banks remain to be addressed. However, the outcome in the ?scal area shows a worse situation at the end of ten years than at the start. Critics often blame the delays in implementation and failure to act in certain areas to the choice of gradualism as a strategy. However, gradualism implies a clear de?nition of the goal and a deliberate choice of extending the time taken to reach it, to ease the pain of transition. This is not what happened in all areas. The goals were often indicated only as a broad direction, with the precise end point and the pace of transition left unstated to minimize opposition and possibly also to allow room to retreat, if necessary. This reduced politically divisive controversy and enabled a consensus of sorts to evolve, but it also meant that the consensus at each pointrepresentedacompromise,withmanyinterestedgroupsjoiningonlybecause they believed that reforms would not go “too far.” The result was a process of
change that was not so much gradualist as ?tful and opportunistic. Progress was made as and when politically feasible, but since the end point was not always clearly indicated, many participants were unclear about how much change would have to be accepted, and this may have led to less adjustment than was otherwise feasible.11 The alternative would have been to have a more thorough debate with the objective of bringing about a clearer realization on the part of all concerned of the full extent of change needed, thereby permitting more purposeful implementation.However,itisdif?culttosaywhetherthisapproachwouldindeedhaveyielded better results, or whether it would have created gridlock in India’s highly pluralist democracy. Instead, India witnessed a halting process of change in which political parties that opposed particular reforms when in opposition actually pushed them forward when in of?ce. The process can be aptly described as creating a strong consensus for weak reforms. Have the reforms laid the basis for India to grow at 8 percent per year? The main reason for optimism is that the cumulative change brought about is substantial. The slow pace of implementation has meant that many of the reform initiatives have been put in place only recently, and their bene?cial effects are yet to be felt. The policy environment today is therefore potentially much more supportive, especially if the critical missing links are put in place. However, failure on the ?scal front could undo much of what has been achieved. Both the central and state governments are under severe ?scal stress, which seriously undermines their capacity to invest in certain types of infrastructure and in social development where the public sector is the only credible source of investment. If these trends are not reversed,itmaybedif?culteventomaintain6percentannualgrowthinthefuture, let alone accelerate to 8 percent. However, if credible corrective steps are taken on the ?scal front, then the cumulative policy changes that have already taken place in many areas combined with continued progress on the un?nished agenda should make it possible for India to accelerate to well beyond 6 percent growth over the next few years.
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