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The Vicious Cycle Of Black Gold

Posted in Finance Articles, Total Reads: 1916 , Published on December 29, 2013

India’s gold consumption reached a decade high at 310 tonnes during the April-June quarter despite import restrictions and hike in duties. The world gold council is forecasting the annual import to be either same or slightly above the last year’s consumption of 950 tonnes. The obsession with the yellow metal is natural, but there is another ominous development hurting the Indian economy.

It is the slow, inexorable rise in black gold i.e. coal imports. Though India is rich in coal reserves, but the kind of variety found in India is not superior. It lacks the high degree coal content. India imported nearly $14 billion of coal last year. As the thirst for and actual power increases, the need for more import is hurting. The import bill for coal is expected to increase by 10% due to increase in quantity and also a weaker rupee.

The government first spends billions of rupees purchasing coal and then spends a vast amount of exchequer on awareness, campaigns and measures to control the pollution and disposing off enormous quantities of wastes. The people suffer various forms of respiratory diseases. It thus forms a ‘vicious cycle’.

So, is there any way to break the cycle? Or is there any way to stop the increasing coal imports without sacrificing the energy needs of the country. The answer to these questions is YES. There is a way called as ‘Green Energy’.

Green energy is refers to as the type of energy that is produced from energy sources and are environment friendly. It is a blanket term that applies to energy production from sources that are renewable and do not cause pollution. India is located on the equatorial belt and receives abundant solar radiation. Most part of India experiences about 250-300 clear sunny days, making it possible to generate about 600 million GWh of energy every year. Hence among all the green energies solar energy has the maximum potential.

The common reason for most states not installing solar plants is due to its ‘high costs’. As a matter of fact, the reason no longer holds true thanks to the advancements in the solar photo voltaic technology and solar thermal technology which have lowered the cost of electricity form solar plants significantly.

The Gujarat solar plant perfectly exemplifies the above notion. The plant generates about 856.81MW (as on 31-3-2013). The park solely relies on sunlight and not on coal. The plant is also expected to save about 8 million tonnes of carbon dioxide from being released in the atmosphere and would also save about 900,000 tonnes of natural gas per year.

Hence not only it would restrict the import of coal but also help in stopping the increasing pollution level and various problems caused by it. And if Gujarat could imply such a model, then can most other states. So, it would be wise for the state government to exploit the green energy in order to break the vicious cycle of black gold.

This article has been authored by Shukrant Jagotra from University Business School, Panjab University

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