(MENAFN- The Arabian Post)

By Nantoo Banerjee

If global oil giant BP plc's 'Energy Outlook 2025' proves to be true, India will be a global leader in energy consumption, outpacing all other countries by 2050. The country will account for 12 percent of the global demand, up from seven percent from 2023, according to BP's chief economist Spencer Dale. The total energy consumption at current prices will be close to Rs. 36,000 billion. However, the changing geopolitical situation remains a matter of concern. The sudden punitive action by the United States against Russian oil exporters, last week, is expected to hit India hard. India has been the biggest importer of discounted Russian oil since 2024. The country has to return back to its traditional suppliers in West Asia and the US. The global oil price has already started moving up.

The question is: how well is the country prepared to meet such a massive expenditure, especially considering that India is nearly 90 percent import dependent for oil at present. The situation is extremely tricky. India needs to plan and implement a more vigorous economic growth strategy in the face of its massive energy shortage and growing import dependence. It is important that India must work on a policy that will provide an overall balance in its foreign trade and foreign investment into its economy, and preserve the exchange value of the domestic currency, Rupee. The task is not easy. Hopefully, the government is fully aware of the situation and engaged in preparing a plan of action over the next two decades.

Currently, India is the world's third largest oil importer and consumer. And, it is the fourth largest LNG (liquified natural gas) importer. LNG is cooled natural gas to a liquid state, reducing its volume by about 600 times, making it easier and safer to transport and store in large quantities. India's natural gas consumption is projected to more than double by 2050, from the present level of 63 billion cubic meters (bcm) to 153 billion bcm. The country's oil demand is projected to grow from 5.4 million barrels per day to 9.1 million barrels by 2050. It may be noted that India's domestic crude oil production during the fiscal 2024-25 was around 26.5 million metric tonnes (MMT), a decline of about 2.5 percent from the previous year. As per available official records, India's gross domestic natural gas production for the financial year 2023-2024 was only 36.44 billion cubic meters (BCM).

See also Trump Has Not Got Nobel Peace Prize But The Winner Machado Is His Acolyte In Latin America

At the same time, the India Brand Equity Foundation (IBEF) projected that India's oil demand will register a 2x growth to reach 11 million barrels per day by 2045. The demand for diesel is expected to double to 163 MT by 2029-30. Diesel and gasoline are projected to cover 58 percent of India's oil demand by 2045. The country's natural gas consumption is projected to grow by nearly 60 percent by 2030, reaching 297 million standard cubic metres per day (mmscmd), up from 188 mmscmd in FY24. IBEF projects that India's oil and gas consumption will significantly increase through 2050, driven by strong economic growth and rising urbanisation. India's oil consumption is forecast to rise from four million barrels per day (MBPD) in FY22 to 7.2 MBPD by 2030 and 9.2 MBPD by 2050. The natural gas consumption is projected to increase at a compound annual growth rate (CAGR) of 12.2 percent.

While China is one of the world's fastest growing major economies, BP's chief economist Spencer Dale said India is growing more rapidly. Dale argued that at a conservative five percent annual economic growth between 2023 and 2050, which amounts to double the projected global economic growth, India's primary energy consumption is going to remain strong.“When we look ahead, India is the fastest-growing energy market in the world.... So when we think about what is driving global energy, India is at the heart of the process,” Dale pointed out. Electricity continues to play an increasingly important role in meeting India's energy needs.

The two important questions that naturally arise in this context are: (a) will India be able to deliver an average annual economic growth rate of five percent through the next 25 years, and (b) does the country's growing energy import dependence pose a risk. According to eminent global researchers, a five percent average annual economic growth for India until 2050 is a feasible and moderate projection. Major financial institutions like the World Bank, EY and Greater Pacific Capital predict India could maintain growth rates between five and eight percent over the next few decades, potentially becoming a $30 trillion economy by 2050. Recent reports from EY suggest the Indian economy is expected to grow at 6.7 percent in FY26, driven by strong first-quarter performance and GST reforms, but facing headwinds from global trade. Longer-term projections suggest India could become the world's second-largest economy by 2038, reaching a GDP of $34.2 trillion in PPP terms by then, supported by its young population, high savings, and structural reforms.

See also Israel-Hamas Ceasefire Deal Is Welcome But The Follow Up Is Crucial For Enduring Peace

The factors projected in support of India's strong economic growth in the coming decades include favourable demographics, strong domestic demand, robust services sector, encouraging government policies and reforms, infrastructure development, and digital transformation. India has one of the world's youngest populations, providing a demographic dividend that is expected to last for decades. In contrast, competitor economies such as China and developed Western nations are experiencing aging populations and shrinking workforces. The country's expanding digital economy and widespread adoption of digital payments will foster innovation, improve business efficiency, and increase tax compliance.

Yet, going by the current economic situation, there are risks and challenges to continuously achieving high-end economic growth, the biggest of them being the lack of investment in manufacturing. Despite government initiatives attracting private investment into manufacturing, the result is yet to be encouraging. India's reluctance to fully integrate into global value chains with lower tariff barriers are standing in the way of competitiveness. The job creation has not kept pace with the growing workforce, particularly in the manufacturing sector. Automation and AI may further exacerbate this issue. The persisting high levels of income inequality, with a large portion of the population remaining outside the formal economy, is also a matter of concern. Unless this issue is addressed, it could limit consumption and create social instability. India's external dependencies for critical items such as oil and natural gas, and rare earths make it vulnerable to global headwinds, including economic slowdowns in major trading partners, geopolitical conflicts, and high oil prices. Unequal access to quality education, skill development, and healthcare, particularly in rural areas, could hinder productivity and undermine the country's demographic dividend. (IPA Service )

The article India Is At The Heart Of Driving The Global Energy Process appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

MENAFN27102025000152002308ID1110256292