Is India ready to reform its energy pricing? Neelkanth Mishra, Chief Economist at Axis Bank, believes it must be done to enhance industrial growth and job creation.
Currently, residential electricity in India is available at very low prices, while industrial consumers face some of the highest rates globally. “This disparity in electricity prices affects industrial competitiveness and job creation,” Mishra stated.
With geopolitical tensions in West Asia, India has a unique opportunity to reform its energy sector. Mishra pointed out that the current WTI crude oil price is approximately $85 per barrel, while Brent crude is around $90. If prices stabilize at $110 per barrel, the Indian rupee could depreciate to ₹100 against the US dollar.
High industrial energy costs could worsen if the rupee falls significantly. Mishra warned, “Reforming energy prices is not just about reducing costs, but also about enhancing capacity and fostering innovation.”
He emphasized that comprehensive energy pricing reforms are necessary to balance social justice and industrial competitiveness. Investments in energy efficiency and alternative resources can help mitigate currency risks and volatile energy costs.
Moreover, the government may focus on providing stable, low-cost electricity by investing in green energy and infrastructure capacity. Mishra noted, “India already is undertaking reforms in the energy sector, such as expanding renewable energy and modernizing grids.”
Historically, Mishra referenced Japan’s response to the oil crises of the 1970s as an example of how energy reform can lead to economic growth.
As the situation evolves, the urgency for reform in India’s energy sector becomes more apparent. The question remains: will the necessary changes be implemented in time to boost industrial competitiveness?
