India’s power demand may grow by over 6% for the second year in a row in FY23, which is higher than the pre-pandemic levels and the long-period average growth of 5%, Crisil said. The above-average growth trend could continue for two more fiscal years, it added.
During the first quarter of the current fiscal, power demand has already seen a 18.7% on-year growth, in line with economic recovery.
Crisil forecasts slower growth in power demand in the second and third quarters, amid expectations of lower export growth due to rising recession concerns in two of India’s top trade partners.
“The past three decadal trends show power demand tangoes economic cycles. On average, it has grown 100 basis points slower than gross domestic product (GDP),” it said. The rating agency has forecast India’s GDP growth at around 7.3% for the current fiscal year.
In FY22, power demand grew 8.2% over FY21 and around 6.9% above FY20, the pre-pandemic period. This was driven by the commercial and industrial segments, as manufacturing and services activity picked up, Crisil said.
Says Hetal Gandhi, Director, Crisil Research, “The first quarter may have accounted for 75% of the expected incremental power demand for this fiscal, with consumption surging across key categories — agriculture, residential, and C&I. While rising ambient temperatures have propped residential offtake, high prices of diesel has cranked up demand for subsidised power from the farm sector. The upcoming festive season, if robust, will also trigger higher-than-expected power demand growth.”