Power demand not a reliable indicator of economic health: Economic Survey

Electricity demand is not a reliable indicator of the country’s economic health, hinted the Economic Survey tabled in Parliament today.

“….. the relationship between these indicators and GDP growth has been far from stable in the past,” said a chapter on ‘Is India’s GDP growth overstated, No!’

“For example, growth in electricity consumption was negatively correlated with real GDP growth in 1980-84, positively so in 1985-89, negatively so in 1990-99, positively so in 2000-04 and negatively so in 2005-09, flipping signs four times before 2011, the year of methodology revision,” the survey said.

“Given that these indicators do not exhibit a stable relationship with GDP growth even before 2011, they are poorly equipped to diagnose mis-estimation post 2011,” it said.

The survey tried to address concerns emanating from low power demand in the country. Electricity demand in December increased 1.3% year-on-year after four months of lull.

While there was lesser consumption from industrial states, the government has discounted the decline saying it was a result of good rainfall and energy efficiency and conservation measures.

ET Energy World
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