Power cos to face collateral damage as economy shrinks; demand likely to contract in current fiscal

India’s power demand is likely to remain subdued amid a daunting economic outlook for the coming quarters. The electricity demand and the consequent generation would contract for the financial year as a whole, said a report by Care Ratings.

Domestic electricity generation during the 5 months of April to August 2020 has been at a 4-year low and 11 per cent lower than the generation in the corresponding months of last year, it added. While it is believed that the improvement in electricity consumption and generation would be contingent on the pace of economic revival, the forecast of a double-digit contraction in FY21 GDP has induced fear in the power sector as well.

Even as the lockdown restrictions have been lifted, the industrial and commercial activity is far from the pre-pandemic levels and they are unlikely to touch that level in the near future. The electricity demand and generation rebounded as soon as the nationwide lockdown was lifted but they could not sustain.

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