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The role of the energy sector in powering India’s growth.

Sustainability is the deal of the day. Know how the energy sector is gradually moving towards sustainable energy sources.

energy sector in india

How do you define energy? Is it the strength to do physical tasks? Is it the force that keeps you active mentally? Whatever the definition may be, it has something to do with the power to keep you going. Do you agree?

Similarly, energy is crucial for the economy to keep going, too. Energy is one of the most significant sectors that helps the economy function and grow. But what is energy in this context? Let us go through, in the article below – the energy sector and its contribution to India.

What does the energy sector consist of?

In simple words, energy is the power or capacity to initiate movement in a living being or an object. While food, sunlight, water, etc., are the energy sources for living beings, objects rely on electricity, gas, fuel, chemicals, etc.

So, the energy sector consists of all companies that work on producing, extracting, and distributing different energy sources such as petroleum, coal, and electricity.

The energy sector is the foundation for all other sectors, providing the basic means to keep the appliances, machinery and manufacturing factories working. 

Imagine the absence of facilities like electricity and gas. The country would have to go back to its stone-age ways of using sunlight and stones for fire. But would that be sufficient to run all the economic activities to keep India running in the global race? Well, it does not sound practical. So, it is fair to say that the energy sector is the lifeblood of any economy today.

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The growth of the energy sector in India

Electricity was introduced to India in 1879. The authority to generate and supply power was primarily with private companies in the pre-independence era. Electricity was mostly used by public utilities, banks and other organisations. It was rarely used by individuals in their residences.

The post-independence era favoured the power sector with new policies coming in. At the time of independence, India was heavily reliant on coal to generate energy. Gradually, it moved to other sources like hydropower, wind energy, solar energy, etc.

Economics of the energy sector in India today

  • India is the third-largest producer of electricity globally and the second-largest producer of coal.
  • The capacity of electricity plants installed in India as of 31 March 2023 is 416,059 MW (Mega Watts), with a growth rate of 4.15% from the previous year.
  • The country currently generates 56.8% of its energy from fossil fuels using coal, gas, etc., and 43% from non-fossil fuel sources like solar, wind, etc. The country aims to install non-fossil fuel plants to meet a capacity of 500 GW (gigawatts) by 2030, increasing its share to 50% of the total energy.
  • India’s electricity generation was at 1,624 billion units in 2022-23 and is expected to grow by 7.2% in 2023-24 to reach 1,750 billion units.
  • Currently, India generates 51% of its energy from the private sector, 25% from the state and 24% from the central government organisations.

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Renewable energy sector in India

Renewable energy is using natural sources to generate power, like sunlight, water, wind, etc.

The increasing focus on renewable sources over non-renewable sources like coal and gas is due to their availability in abundance. While resources like coal get exhausted with time, renewable sources replenish themselves and are always available for generating electricity.

Another important component is the emission of harmful gases causing air pollution while extracting energy from non-renewable sources. Renewable sources are sustainable and friendly to the environment, which helps in tackling issues like global warming.

India is the fourth largest country concerning renewable plant capacities. The capacity of such plants has increased by more than 369% in 85 years, with 176.49 GW in July 2023.

Wind43.7 GW
Solar70.1 GW
Biomass10.2 GW
Small hydropower4.94 GW
Large hydropower46.85 GW
Waste to energy0.55 GW

Government’s initiatives towards renewable energy

  • The government aims to achieve a carbon-emission-free India by 2070. The first step towards it is to reduce it by 1 billion tonnes by 2030.
  • The government has approved setting up 57 solar parks across the country with a capacity of 39.28 GW. The purpose of this is to increase the utilisation of solar energy.
  • The national green hydrogen mission is an initiative to increase the production and use of hydrogen in the country. The government has side an initial fund of ₹19,744 crore towards this project.
  • The government has also announced a production-linked incentive scheme for manufacturing solar PVs (Photovoltaics) with an initial fund of ₹24,000 crores.

Sectorwise energy consumption in India

Energy consumption across different sectors has increased from 227.92 MTOE in 2006 to 490.3 MTOE in 2022.


Numbers expressed in MTOE: Million Tonnes of Oil Equivalent

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Top energy sector stocks in India

NTPC (National Thermal Power Corporation) is one of India’s largest energy sector companies, with the highest-ever power generation of 400 billion units in FY 2023. The group has a total installed capacity of 73,874 MW.

Below are the top 10 stocks on NSE and BSE according to their market capitalisation (As of 07 Dec 2023):

NameNSE share priceNSE market cap (In ₹ Crore)BSE share priceBSE market cap
Adani Power562.40215,969.30561.80216,046.43
Power Grid Corp



Adani Energy1,198.70132,883.071,197.00133,240.02
Tata Power325.80103,305.33326.70104,247.95
JSW Energy458.3073,418.32460.2073,327.86
Torrent Power1,003.8546,925.02995.2047,117.27
NLC India186.3525,763.71186.6025,784.51


The energy sector in India has greatly transitioned from the pre-independence era till today. It already holds a prominent position in the global energy platform. The government is currently focussing on renewable sources for India to reduce dependency on exhaustive resources. So, the power sector will surely be an energy booster for the Indian economy in the long run.

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