High on agriculture, rural demand driving up power consumption

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NEW DELHI: A day after the farm sector emerged as the only bright spot amid shrinking GDP, latest data from the national grid operator shows growth rural demand driving up India’s electricity consumption, with essentially agrarian states in the northern and eastern regions posting healthy growth, while heavily industrialised states in western and southern regions continue to falter.
An analysis of supply data from national grid operator by rating agency ICRA shows power consumption hitting nearly 98% of the pre-Covid level in August, up from 97% in July. Demand in the northern and eastern states grew between six per cent and 13 per cent in July, while those in large industrial states in the western and southern regions fell in the same range on slow recovery in industrial activity and renewed lockdowns.
“A combination of factors is driving rural demand. One is agriculture, which grew 3.4 per cent even while the economy shrank 23.9 per cent in the first quarter. The return of migrant labourers have added to rural consumption, helped by household electrification and improved supply,” Girishkumar Kadam, ICRA sector head and vice-president, corporate ratings, told TOI.
Growth in domestic demand is also being helped by families still largely remaining indoors and working from home. Besides, the humid weather is making people run air-conditioners for longer hours.
“But higher domestic demand is not enough for discoms (distribution companies) to make up for tepid demand from high tariff-paying commercial and industrial (C&I) consumers,” he said.
Other analysts said demand for electricity from industry will rise only after the flow of material and products stabilize once ready stocks at factories and supply depots are gone and there are no local lockdowns.
The decline in demand has adversely impacted revenue and cash flow of discoms, especially when the bulk of the consumption decline has come from high tariff-paying industrial and commercial consumers.
The countrywide lockdown imposed to check the spread of Coronavirus infection knocked off all-India power demand by 13% in the first four months of the current financial year. While the monthly demand recovered to 112 billlion units in July 85 billion units in April, it was lower than the comparable year-ago period.



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