India coal power output drops 9.5% in May at fastest pace in five years
Live Events
(You can now subscribe to our
(You can now subscribe to our Economic Times WhatsApp channel
India's coal-fired electricity generation in May fell at the fastest pace in five years, as overall power demand declined for the first time since August and renewable energy generation rose to a record high, a Reuters analysis of government data showed.Increased generation from less polluting power sources including hydro and nuclear also led to a decline in natural gas-fired power output, which fell at the steepest rate in nearly three years, a review of data from the federal power grid regulator Grid India showed.The decline in demand for fossil fuels for electricity generation in India - the second largest importer of coal and the fourth biggest buyer of liquefied natural gas (LNG) - comes at a time when benchmark prices of the fuels are under pressure."Demand from the power sector - typically strong during peak season - remained limited. Additionally, economic headwinds have weighed on non-power industries," Indian coal trader I-Energy said in a note this week.Asian spot LNG prices have declined more than 15% this year, while benchmark prices of thermal coal have plunged to more than 4-year lows due to weak demand from China and India - the top coal importing countries.India's coal-fired power generation fell 9.5% in May on an annual basis to 113.3 billion kilowatt-hours (kWh), a review of data from the federal power grid regulator Grid India showed, marking the sharpest year-on-year decline since June 2020, when the COVID-19 pandemic led to a nationwide lockdown.A sustained slowdown in demand for fossil fuels for power generation could help the world's third largest emitter of greenhouse gases slash emissions after it previously boosted its reliance on coal to power a post-pandemic economic recovery.India has repeatedly cited lower per capita emissions compared with richer nations to defend its high coal use.Utilities in China and India have cut dependence on coal and LNG imports this year also due to record coal stocks and slower growth in power demand.India had forced gas-based power plants to operate last year to meet high power demand as temperatures soared.As power demand is lower and prices are high for gas-fired power to be competitive with other sources such as solar this year, utilities will buy fewer volumes, said Prashant Vashisth, vice president at Moody's affiliate ICRA.Total electricity generation in May fell 5.3% year-on-year to 160.4 billion kWh, the data showed, with the highest peak demand about 8% lower on-year at 231 GW, mainly due to milder temperatures, government officials said.Peak demand - a measure of the maximum electricity requirement over any given time - reached 250 GW during a heatwave in May 2024.Meanwhile, renewable energy output surged to a record high of 24.7 billion kWh in May, up 17.2% from a year earlier, with its share in the overall power mix rising to 15.4% - the highest since records began in 2018.The share of coal in India's power mix dropped to 70.7% in May, down from 74.0% a year earlier and the lowest level since June 2022, according to the Grid India data.Hydropower generation jumped 8.3% to 14.5 billion kWh, accounting for 9.0% of total generation compared to 7.9% in May 2024, the data showed.Natural gas-fired power generation fell 46.5% annually to 2.78 billion kWh in May, the steepest decline since October 2022.(Reporting by Sudarshan Varadhan and Sethuraman N R; Editing by Kate Mayberry)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
22 minutes ago
- Indian Express
For a $5 trillion economy, India must embrace cutting-edge tech
The Indian economy is on the threshold of crossing another milestone and becoming the fourth-largest in the world. It is a commendable achievement for a country that began its journey as an independent nation in 1947 with a meagre $33-billion economy. Decades of British exploitation left it significantly weakened and poor. The Jawaharlal Nehru government's Soviet-style central planning, while promoting heavy industries and the public sector, led to low economic growth of 3-4 per cent, pejoratively described as the 'Hindu rate of growth'. In 40 years, it could only reach the $266 billion mark. The first major leap came in 1991 when the Narasimha Rao government introduced economic liberalisation and unleashed the potential of Indian entrepreneurs. The opportunity offered by the digital revolution with the introduction of the internet was quickly seized by some of India's brightest tech entrepreneurs. The Indian economy grew manifold in the next two decades on the strength of its services economy, which contributed 60 per cent of the nation's GDP. The economy crossed $2 trillion by the time the Narendra Modi government came to power. The last 10 years have seen the Modi government giving greater emphasis to faster economic growth through programmes like Stand-Up India, Start-Up India and Make in India. The results are there to see. IMF data from May has projected that the Indian economy will overtake Japan this year, reaching the $4.19 trillion mark. Japan was once a $5.8 trillion economy but has shrunk to $ 4.18 trillion due to stagnation and slow growth rates since the 1990s. As India demonstrated promising growth, naysayers rushed forward to raise the hollow bogey of per capita income. Per capita income is determined by factors like the size of the population. India is the world's most populous country. As a result, whatever may be the size of GDP, its per capita figures are bound to remain low. No country's growth can be measured on the criterion of per capita income alone. Although the US is the world's largest economy with a $28 trillion GDP, it ranks seventh in per capita. China, the second-largest economy with $18 trillion, ranks 69. The per capita argument is worthless because even if India becomes the world's largest economy with $30 trillion, it will still be ranked 55th in terms of per capita. The only merit of this argument is that the country should be able to provide better living standards to all its citizens. In democracies, the fruits of economic growth percolate to all sections of society. This is reflected in the consumption patterns. Surveys indicate that the monthly per capita expenditure (MPCE) has increased in India by more than 2.5 times in the last 10 years. Interestingly, most of this expenditure was on travel, health and education, indicating healthy growth parameters. Tourism has seen remarkable growth in the last 10 years. China still occupies the first rank in the number of domestic and international travellers. India lagged in this sector for decades due to a lack of disposable income and tourism infrastructure. But today, with the incomes of the middle class growing substantially, Indians have started travelling more. Data indicates about 2.5 billion domestic tourist visits last year. Figures for 2024 indicate that almost 29 million Indians travelled abroad marking a 30 per cent growth. All this indicates healthy economic growth, which has led to the near eradication of baseline poverty and the creation of a strong middle class with disposable income. The Modi government aspires to take the economy to further heights with targets ranging from $ 5 trillion in 2027 to $10 trillion in 2035. The current impressive growth is a result of corrective measures taken by the government. It removed parallel economy, allowed proper distribution of wealth and encouraged greater consumption. But the path from here needs to be calibrated carefully. Economies grow on the strength not just of consumption but also trade and technology. Quality, quantity and speed are the main determining factors. India and China were leading economies until the middle of the 18th century. But when the industrial revolution occurred first in England and later in America, those two countries surged ahead and became leading economic powers by the dawn of the 20th century. When automation and digitisation progressed in the last decades of the last century, China moved ahead of the curve, emerging as the second-largest economy by 2008. We are now in the post-manufacturing and post-digital era. Growth in frontier technologies will determine a country's economic future. A country of India's size and capability cannot just think perpetually in terms of catching up with the developed West and the rest. It has to, instead, think in terms of moving ahead of the curve. We missed the first two industrial revolutions as we were a slave nation at that time. We benefitted partially from the third, digital revolution of the 1980s and '90s and became a leader in sectors like IT services. But the Fourth Industrial Revolution, led by Artificial Intelligence (AI), quantum technologies, robotics, space, defence, crypto and bio-engineering calls for new thinking and new priorities. The impressive growth of the Indian economy in the last decade was largely due to the unleashing of its basic potential. The trajectory from here should be more strategic, with greater emphasis on deep-tech R&D, an area in which we lag. It is important to create a climate of hassle-free access to investments in these areas. Only then can India aspire to achieve its goal of becoming a $10 trillion economy in the next 10 years. The writer, president, India Foundation, is with the BJP
The Hindu
36 minutes ago
- The Hindu
India, U.S. trade talks extended as deadline looms for interim deal, sources say
Trade talks between Indian and U.S. officials have been extended into next week as both sides seek consensus on tariff cuts in the farming and auto sectors, aiming to finalise an interim deal before a July 9 deadline, government sources said. A U.S. delegation led by senior officials from the Office of the United States Trade Representative (USTR) held two days of discussions in the national capital with trade officials headed by chief negotiator Rajesh Agrawal, the sources said. Also Read | India-U.S. trade deal in 'not too distant future': U.S. Commerce Secretary Lutnick "The two countries are actively engaged in focused discussions to facilitate greater market access, reduce tariff and non-tariff barriers, enhance supply chain resilience and integration," one Indian government official with direct knowledge of the talks, said. Negotiators, who had initially aimed to wrap up talks by Friday, will now continue discussions on Monday and Tuesday to resolve outstanding differences, a second official said. U.S. President Donald Trump and Prime Minister Narendra Modi had agreed in February to conclude a bilateral trade pact by fall 2025 and more than double trade to $500 billion by 2030. The current talks are part of efforts to hammer out a limited trade agreement that could lead the Trump administration to revoke 26% reciprocal tariffs on Indian goods - tariffs that have been paused along with those on several other U.S. trading partners for 90 days, the second official said. "Many Indian exporters have held back shipments to the U.S. in the last two weeks, fearing cargos may not reach before the July 9 deadline,' the official added. India's exports to the U.S. jumped nearly 28% year-on-year to $37.7 billion in the January–April period, driven by front-loading of shipments ahead of tariff hikes in April, while imports rose to $14.4 billion, widening the trade surplus in India's favour, according to US government data. Centre approved a licence for Elon Musk's Starlink to launch commercial operations, ignoring his public spat with Mr. Trump, Reuters reported on Friday. India is opposing U.S. demands to open up its agricultural and dairy markets, another Indian official said, citing the impact on millions of poor farmers who cannot compete with heavily subsidised American products. Indian officials have also made it clear New Delhi could pursue its complaint at the World Trade Organisation against the U.S. tariff hikes on steel and aluminium, while aiming to work out a bilateral agreement, the source added.
Hindustan Times
an hour ago
- Hindustan Times
RBI slashes policy rate by 50 bps to accelerate growth
Singles would have done the job, but the Reserve Bank of India decided to hit a six while chasing its monetary easing target . There are now various possible upsides to domestic growth. If the banks also expedite the transmission of interest rate cuts from RBI, mortgage payments could fall and cushion household budgets. This will add to the disposable income tailwinds from the upwards revision in income tax slabs, which have kicked in from April. A good monsoon is expected to boost rural incomes. That all this is happening in what is expected to be a benign inflationary environment – 2025-26's inflation forecast has been brought down from 4% to 3.7% -- only makes things better. The quarterly inflation projections beginning June 2024 are 2.9%, 3.4%, 3.9% and 4.4%. The policy rate in this case is the repo rate at which the RBI lends money to banks, making it the anchor of all other interest rates in the economy. CRR is the mandated share of deposits which banks have to keep in cash, either themselves or with the RBI. A reduction in CRR, therefore, frees more money for credit creation (roughly ₹2.5 lakh crore in this case). After Friday's decision, the MPC has already reduced the repo rate by a percentage point in this easing cycle of five months, taking it to the lowest level since August 2022 when it was 5.4%. The rationale for the aggressive action came from RBI governor Sanjay Malhotra . 'I must also add that while price stability is a necessary condition, it is not sufficient to ensure growth. A supportive policy environment is vital', he said in unambiguous terms in his post-MPC written statement. The message behind the action was best described by Madhavi Arora, lead economist at Emkay Global. ' RBI appears to have front-loaded all policy actions, be it higher-than-expected rate cuts or infusing durable albeit staggered liquidity via lower CRRs. All of that now implies that the ball is in the banks' court to transmit easier financial conditions faster,' she said. 'It is imperative to continue to stimulate domestic private consumption and investment through policy levers to step up the growth momentum. This changed growth-inflation dynamics calls for not only continuing with the policy easing but also frontloading the rate cuts to support growth. Accordingly, the MPC voted to reduce the policy repo rate by 50 basis points to 5.50 per cent', the Governor said in his statement while adding that there would likely be no more rate cuts in the immediate future. 'After having reduced the policy repo rate by 100 bps in quick succession since February 2025, under the current circumstances, monetary policy is left with very limited space to support growth. Hence, the MPC also decided to change the stance from accommodative to neutral', governor Malhotra added. All of this raises the hope that the Indian economy could finally see its private investment cycle getting kick-started. Stock markets cheered this possibility, closing 0.9% higher than Thursday, making it the best inter-day gain since May 23. To be sure, RBI does not expect the economy to do better than its April projection of 6.5%. The quarterly growth projections now stand at 6.5%, 6.7%, 6.6% and 6.3% respectively. But Friday's measures could have compensated for persisting, and perhaps strengthening headwinds to economic growth from the ongoing international turbulence. That RBI's decision came a day after the public spat between US President Donald Trump and Elon Musk – the two have gone from being friends to enemies over Trump's fiscal plans – only underlines the volatility of the global economic environment, even as the government tries to work multiple trade deals including with the US to ensure or at least preserve gains from the export front. However, what RBI is underlining, more emphatically than it has done in the recent past, are the strong structural foundations of the Indian economy. Governor Malhotra spoke about a 5x3x3 matrix of fundamentals to highlight the relative advantage of the Indian economy vis-à-vis its peers. The matrix includes strong balance sheets in five sectors, corporates, banks, households, government and the external sector; stability on three fronts, price, financial and political; and investment opportunities through three Ds, demography, digitalisation and domestic demand. This matrix, the Governor said 'provides the necessary core strength to cushion the Indian economy against global spillovers and propel it to grow at a faster pace'. To be sure, the Indian economy has struggled to find its private investment mojo despite larger macroeconomic stability even as dissipating pent-up demand after the pandemic and a peak in government capex has led to a loss of growth momentum. India's GDP growth came down from 9.2% in 2023-24 to 6.5% in 2024-25, showing a significant loss of growth momentum even though India continued to be the fastest growing major economy in the world and expected to become the world's fourth largest by the end of this fiscal year. 'We had been forecasting 75bp in rate cuts over the June, August and December meetings, of which 50bps has now been done. We forecast a pause in the August and October meetings, but hold on to our final rate cut call of 25bp in the December meeting, taking the repo rate to 5.25%,' said Pranjul Bhandari, chief India economist at HSBC. 'This is predicated on our view that growth in FY26 will be lower than RBI's 6.5% forecast,' she added.
