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Our view is that coal will be the primary fuel for generation of electricity in India. This however, does not mean that in meeting India’s electricity needs we will have to neglect the impact on environment. A viable and sustainable solution lies in encouraging generation from “clean” coal. Whilst policies to promote electricity generation from non-conventional energy are being put in place a significant shift towards low-carbon energy sources, may not take place in the near future.
Our view is that the private sector has a comparative advantage in renewable electricity generation, it is best that the government encourages the private developers for some time to come. Given that the Government of India sees a huge potential for investments in renewables, the power sector reforms have created space for private entry in this mode as the public utilities are cash strapped and have traditionally no comparative advantage in this field, with only 0.85 percent of the public sector installed capacity is in renewables as compared to 40 percent in the case of private. So the idea of a PSU for renewable energy is misplaced.
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