India’s Energy Security: Critical Considerations

This article examines the evolution of the concept of energy security and its proper meaning with regard to India’s energy sector. In the context of energy security, it aims to understand the impact of rising gross domestic product (GDP) per capita and change in oil prices on energy use; patterns in production, consumption and import of major sources of energy, such as crude oil, natural gas and coal in India; and the current structure of India’s energy sector and the impact of regulatory policies thereon. The evidence shows that GDP per capita and energy use per capita have a bidirectional causal relationship and these two also cointegrate. There also exists a unidirectional causal relationship from oil prices to energy use. No causal relationship is observed between oil prices and GDP per capita. For all the sources of energy, the indigenous production capacity is unable to match the consumption requirement, and hence there is an increased dependence on the import of these sources. A major impediment in the achievement of energy security by India is the current regulatory and policy environment that fails to make the sector more attractive for private sector participation and investment.