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The global problem confronting India

Ankit Agrawal

The most important global problem confronting India is “Energy Security”. The dimensions of the problem are multi-axial. To put it succinctly, India needs access to hydrocarbon fuels like coal, oil and gas and it needs to be able to use these fuels (and others like uranium) to generate power and energy to meet the exploding demand of a fast-growing economy. These fuels may be domestically produced or imported.

As of today, not only do we not have access to enough energy domestically, it costs a lot to meet the shortfall through imports. The domestic production of coal is not sufficient to meet the demand for electricity. More than 70 percent of oil and gas requirement is met through imports, nuclear plants don’t have access to enough uranium to run at full capacity and the hydropower potential remains under-exploited. The imported supply and its price tag are vulnerable to currency fluctuations, geopolitical events and equations and hostile military action from enemy countries.

To make sure that energy security is never a problem, we first need to devise and implement sensible domestic policies to resolve issues within the ambit of the state’s influence and authority. Focusing solely on the territory covered by the question, there are elements of the larger problem which can only be solved in co-operation with or influence over other countries:

One,  Assured long-term supplies of oil and gas (in which we are deficient) from friendly countries, which can reach us through sea-routes safe to navigate and pipelines not vulnerable to terrorist attacks.

Two, Assured supplies of uranium to feed and expand our nuclear power generation capacity.

Three, Access to latest technologies from advanced countries to make our nuclear plants more efficient and fail-safe, exploit domestic reserves of oil and gas found in challenging geologies and improve productivity and efficiency in the mining of coal. To give an example, hydraulic fracturing has been hailed as the technique heralding an oil and gas revolution in the U.S. due to which its output is expected to exceed Saudi Arabia’s by 2020, according to an IEA report. US oil and gas majors have gained substantial expertise with the technology which could benefit India. India is believed to have shale reserves in Cambay, KG on-land, Cauvery on-land, Assam-Arakan and Indo-Gangetic basins.

China is an upper riparian state controlling some major rivers flowing into India. It has built huge dams on many of those and diverted waters to other regions of the country, thus reducing the flow to India. This not only deprives India of water resources, it also reduces the hydropower potential of the country.

How Does It Affect The Foreign Policy?

Meeting these needs and solving these problems requires long-term strategic thinking from a foreign policy perspective. We need to develop and maintain good relations with countries exporting these products and technologies. This requires a fine balancing act when faced with competing demands from two countries, both of which may be crucial to us. For example, while we import large quantities of oil from Iran, the U.S. has been demanding that we stop doing so or face retaliatory sanctions in other arenas which could affect our global competence in trade, services and agriculture, and deprive us from gaining access to advanced technology. It also confronts us with moral dilemmas. India has opted to do business with the military government in Myanmar after decades of support to democratic forces led by Aung San Suu Kyi. This has been done keeping in mind India’s need to access Myanmar’s rich gas reserves, build a gas pipeline from it through Bangladesh and the need to prevent China from gaining a monopoly in the region. The decision erodes India’s global credentials as a champion of democracy and may reduce its heft on international forums, making the job of diplomats tougher.

How Does India’s Policy Affect World Efforts To Solve The Problem?

Being a major consumer, India’s bid to lock up energy supplies crowds out smaller countries from the market, thus putting their energy security in jeopardy. Insufficient supplies drive up prices, making energy unaffordable to poorer nations. India’s recent involvement in the South China Sea by way of carrying out exploration activities in disputed territory has muddied geopolitical waters. It has complicated resolution of the dispute over resource ownership by boosting the confidence of smaller countries in the region which are wary of confronting China on their own.

India is expected to enjoy a demographic dividend over the next 30-40 years with the relatively low average age of its population making the workforce more productive. A McKinsey report estimates that by 2030, 590 million people in India would be residing in cities, 91 million urban households will be middle class compared to 22 million today and GDP would have increased five-fold. It is logical to assume that energy demand will thus increase manifold in the next 20 years alone. To meet this demand, the basic elements of our energy security strategy need to be in place by the end of this decade.

What If India Can’t Solve The Problem In Time?

Economic growth rates will plunge, productivity will take a hit and unemployment will soar. As a consequence, a massive swell of unemployed and dissatisfied youth will rise in revolt, causing social and political unrest and chaos. The democratic fabric of the country will be threatened. Food security of the country will be threatened if the agriculture sector doesn’t get enough power, resulting in soaring inflation. Low growth, rampant unemployment and high inflation is a perfect recipe for a full-fledged civil war.

Failure to achieve diversification of energy supplies across countries and sources such as hydrocarbon, nuclear, solar and wind, will make India beholden to other nations. This will reduce our autonomy and manoeuvrability over other issues of national interest, force us to compromise against our will and principles and yield to nefarious interests. We will be taken for granted in a global power configuration driven by real politik, leaving us unable to defend our national interests. In absence of robust economic growth, our military will find it difficult to keep pace with rival powers. Regional rival China will lose no opportunity to compound our woes. It might engage in military adventure in Arunachal Pradesh and Sikkim and collude with Pakistan to facilitate its grabbing of Kashmir. Neighbours like Bangladesh and Sri Lanka may start ignoring us and join hands with Pakistan and China.

Ankit Agrawal is an Equity Research Analyst based in Delhi                                                                   

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