Rising Electricity Consumption Emerges As Key Driver Of India's Economic Growth

(MENAFN- KNN India) New Delhi, Jan 6 (KNN) Electricity consumption continues to play a central role in supporting India's economic expansion, underpinning industrial production, digital infrastructure, transportation, and essential public services.

Industrial electricity consumption has shown a steady upward trend over recent years. Consumption increased from about 320 billion units (BU) in FY 2020–21 to approximately 418 BU in FY 2024–25, reflecting a compounded annual growth rate (CAGR) of around 7 per cent, according to an official press note.

Government initiatives such as the Revamped Distribution Sector Scheme (RDSS) have contributed to this growth by strengthening distribution infrastructure and improving supply reliability, thereby supporting higher industrial demand.

Manufacturing-led growth, particularly in sectors such as steel, cement, electronics, electric mobility, and green hydrogen, remains heavily dependent on reliable and affordable power.

Rising electricity consumption is expected to reinforce flagship initiatives such as Make in India and Atmanirbhar Bharat, enhance industrial competitiveness, attract investment, and deepen India's integration into global value chains.

During FY 2022–23 to FY 2024–25, industrial consumption recorded a CAGR of about 5 per cent, while commercial consumption grew at a faster pace of nearly 10 per cent, increasing from 116 BU to 140 BU, indicating sustained demand from both manufacturing and services sectors.

Short-term factors, including a strong monsoon and record rainfall in several regions, temporarily moderated demand in certain consumer segments. However, with the rollout of GST 2.0 reforms and continued policy support, the economy is positioned for renewed momentum.

A combination of policy measures, rising consumer aspirations, and a maturing energy transition ecosystem is expected to support medium-term demand growth.

Access to affordable electricity has become increasingly important for industrial competitiveness. Policy measures enabling open access procurement, including Green Open Access, have expanded options for industrial consumers to source power based on cost and operational needs.

Open access consumption rose from 32.5 BU to 43.2 BU in FY 2024–25, registering a year-on-year growth of over 32 per cent. This trend strengthened further in FY 2025–26, with first-half consumption reaching 27,892 million units (MUs), compared to 19,206 MUs in the corresponding period of the previous year.

The shift indicates growing reliance on market-based procurement, even as traditional discom-supplied industrial demand faced constraints.

Captive power consumption has also increased, reflecting greater self-reliance among industrial and commercial users. Captive consumption rose from 176 BU in FY 2022–23 to 196 BU in FY 2024–25, translating into a CAGR of about 6 per cent.

At the household level, domestic electricity consumption accelerated significantly, growing by 9.8 per cent in FY 2024–25 compared to 4.8 per cent in the previous year.

States including Uttar Pradesh, Haryana, Rajasthan, Punjab, West Bengal, Bihar, and Delhi were among the major contributors, reflecting urbanisation, wider electrification, and higher appliance penetration.

Looking ahead, growth in electricity consumption aligned with the expansion of renewable energy is expected to support both economic development and climate objectives. Continued investments in solar, wind, and energy storage can help meet rising demand while lowering carbon intensity.

A resilient, green, and inclusive power sector is thus positioned to support sustained economic growth and strengthen India's role as a responsible global power.

(KNN Bureau)

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