In the space of just a few days, India’s slowing economy has attracted the attention not only of the domestic press, but of international media including the Financial Times and an Economist special report, which noted that “with alarming speed, India has gone from being the world’s fastest-growing large economy to something more like a rumbling Indian railway train.”
A host of economic indicators have received attention, ranging from the official (World Bank and Indian government growth downgrades) through indices such as Fitch Ratings or LiveMint’s Macro Tracker, to the flippant but nonetheless informative (including the New York Times’ story on underwear sales, or Neilsen’s report of declining toothpaste purchases in rural India).
To this list may be added an economic heavyweight: thermal coal.
Having held up throughout the summer when other signs of a relative downturn were already apparent, the amount of thermal coal burned for power fell precipitously in September and October. So steep has been the decline that the annual increase in coal consumption by the power sector, which has averaged 6.3% or 27 million extra tons each year for the last 12 years, fell to zero not only for the financial year to date (Figure 1), but also for the full 12 months to 31 October 2019, compared to the previous year.
When economies stumble, slackening electricity demand is a very common symptom. In India’s case, the current decline is quite specific to coal. This is most readily seen by comparing how power generation from different sources has changed across the course of this year relative to last.
Hydro, solar and nuclear have added substantially to their generation levels of the previous year and continue upwards. Wind started well but the monsoon period was disappointing, resulting in less cumulative generation than at the end of October in FY19. Gas, a minor player, also lagged slightly.
Collectively, power from all non-coal sources grew by about 24,000 GWh or 8.4%, to the end of October. The obvious exception is coal, which had made the largest contribution to extra energy as of late July, only to falter in August and collapse in September and October. As of the time of writing, coal had produced about 12,500 GWh less electricity than it had by the same date in FY19, roughly the amount, for perspective, consumed by Delhi and its 24 million residents in five months.
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If this is sustained, it will be very good news. Falling coal consumption in Europe, the USA, and now India.
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