Think ahead: Beyond an economic stabilization fund, India must tackle its energy vulnerability

These are extraordinary times and the Centre should place pain reduction for households over the accuracy of its fiscal arithmetic, even though finance minister Nirmala Sitharaman told Parliament that unplanned expenditure will not unsettle its deficit target for 2025-26.

The stabilization fund, introduced on 13 March through a supplementary demand for grants, affords the government headroom to meet the war-driven spike in energy prices while holding down price-lines for families across the country.

The Centre also sought Parliamentary approval for a separate fund to neutralize a rise in fertilizer prices and restore supplies for the farm sector. The fund’s adequacy is uncertain, like much else right now, but shockwaves from the war and the hardships caused by them hold out some important lessons for India’s economic strategy and management.

First, we must undo India’s lackadaisical approach to reducing energy import dependence by aggressively exploring and exploiting hydrocarbon reserves in our own backyard.

It is nobody’s case that this is an environmentally flawed idea, not to mention how anachronistic it might seem in this day and age; but given the economy’s reliance on oil and gas for the foreseeable future, the government should draft a new hydrocarbon policy that opens up fresh reserves for exploitation at optimal cost.

The entire chain—surveys, exploration, drilling, refining and marketing—needs a close look to weed out inefficiency. While it is true that this will not be enough to meet domestic demand, it would go some way to bolster our energy security.

The second must-do for reduced vulnerability is to enhance strategic reserve capacity significantly. Apart from oil marketing companies, whose stockpiles of crude and its products fluctuate, India’s special purpose company set up to hold strategic reserves has a total capacity of only 5.33 million tonnes. Or just about 40 million barrels. With daily usage expected to touch 6 million barrels over 2026, that is woefully little. Clearly, we must expand how much can be held for emergency release.

Admittedly, these are medium-term plans. In the long run, India needs to reduce its dependence on fossil fuels, hydrocarbons included, by multiplying its renewable energy infrastructure.

The government, to be fair, has been placing policy emphasis on a ramp-up of solar and wind power capacity, the former down to the household level. Yet, multiple glitches and vested interests seem to have held back key aspects of the green transition. Also, patchy charging networks constrain the adoption of electric mobility.

The Centre must focus on easing these bottlenecks. Although its green initiatives have attracted global recognition, particularly the International Solar Alliance, New Delhi’s geopolitical position needs to be clarified.

This is moot in the light of New Delhi’s current Brics+ presidency; it must use this to seek peaceful resolutions of all conflicts around the world, not least the one that has set the Gulf aflame. Historically, India’s diplomacy and principled stand have won it wide global respect. It’s time to reclaim such gains.