Coal shortages could hurt India’s economic growth going ahead, Capital Economics said in a note on September 13.
“Global coal prices are likely to stay high for a while yet, which will limit how much imports can rise. And if domestic production struggles to meet demand for an extended period, power outages and economic disruption would almost certainly follow,” Shilan Shah, senior India economist, said. “That’s a downside risk to our forecast for GDP growth of around 6.5 percent both this year and next.”
Energy supply concerns in India have heightened amid low inventories of coal. Coal-fired power plants only have on average enough stocks to last 10 days, Capital Economics said.
While this is still above the depths reached during the middle of last year, it is low by historic standards and falls well short of the target of 21 days set by the ministry of power and renewable energy, it added.