Energy crisis in India due to shortage of coal

energy Crisis in India

Before a central bank meeting, India is facing higher oil prices, and coal shortages risk increasing inflation and hampering economic development in India, which is hitting the country’s currency and bonds.
What does the absence of coal imply?
There are huge chances for India to face an energy crisis if the situation continues. Due to a lack of coal, factories may close, forcing India to import additional fossil fuels when oil prices are at a seven-year high, already putting pressure on the energy-hungry country. Inflation fears and a widening external deficit have caused a 12-basis-point increase in the country’s benchmark bond yields during the last two weeks, as well as a drop in the rupee.
Coal-fired power plants have an average of four days’ worth of fuel, and more than half of them are on the verge of shutting down.
What caused India’s coal shortage?
India’s looming power shortfall parallels China’s, which saw growing factory demand collide with supply limits caused by high coal prices. Analysts in India claim that after a jump in Covid-19 earlier this year, energy demand has resurrected due to a significant increase in the manufacturing sector.
“No one expected the economy to turn around so quickly after Covid. People had predicted that the economy would take 2-3 years to recover to pre-pandemic levels,” Pamnani added.
Higher global coal costs and domestic freight charges have prompted utilities that rely on imported coal to postpone purchases. As a result, there was a greater reliance on domestic coal stockpiles, which depleted them. The country’s coal mining was also affected by heavy rains in September.
Shortages of electricity
According to government data from the power ministry, the disparity between available electrical supply and peak demand expanded to more than 4 gigawatts on Monday, indicating the emergence of power shortages.
In India, there haven’t been any large-scale power outages yet. So far, shortages have been confined to northern provinces like Uttar Pradesh, Jammu and Kashmir, and Ladakh.

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