Electricity Demand Falls For Fourth Straight Month

The country's power demand fell 4.3 per cent in November from a year ago, representing the fourth straight month of decline, government data showed, potentially reflecting a worsening industrial slowdown which has stifled overall economic growth.

In October, the country's power demand fell 13.2 per cent from a year ago, its steepest monthly decline in more than 12 years, as a growth slowdown in Asia's third-largest economy deepened.

An official at Ministry of Power attributed the tepid electricity demand to an early onset of winter and high rainfall, which he said has reduced the need for air conditioning.

However, electricity demand from industries account for over two-fifths of India's annual electricity consumption, according to government data, with residences accounting for nearly a fourth and commercial establishments for another 8.5 per cent.

Commercial establishments account for a bulk of the electricity demand for cooling, and air conditioning in India is still largely restricted to cities.

Electricity demand fell to 94.60 billion units in November, from 98.84 billion units during the same period last year, data compiled by the Central Electricity Authority (CEA) showed.

For the eight months ending November 30, India's electricity demand was up 1.2 per cent, the CEA said. Demand rose 6.4 per cent during the eight months ended November 30, 2018.

"Power demand can decline for two reasons: one is the existing projects not performing and second due to new projects not coming up. Both seem to be the case here," said N.R. Bhanumurthy, a professor at the National Institute of Public Finance and Policy in New Delhi.

Electricity demand is seen by economists as an important indicator of industrial output and a deceleration could mean a further slowdown.

The country's overall economic growth slowed to 4.5 per cent in the July-September quarter, government data last month showed, the weakest pace since 2013 as consumer demand and private investment weakened.

Slower economic activity has resulted in a fall in sales of everything from cars to cookies, prompting some large scale industries such as the automobile sector to slash jobs.

With the exception of Tamil Nadu, demand fell in all large and industrialized states. Energy requirement fell across all regions in the country, the data showed.

India's most industrialized and electricity hungry state Maharashtra saw demand fall 8.1 per cent, the data showed. Demand from large states such as Madhya Pradesh fell 13.9 per cent, while power requirement from Rajasthan fell 5.7 per cent.