The co-existence of two separate economic systems in the same geographical space could portrait the dual economy. The first years after India’s independence from Great Britain played a crucial role in India’s energy market.
The Dual Economy
In that years, Indian policymakers couldn’t imagine the long-term consequences of their self-reliance policy. India showed some features of advanced economies in the industrial sectors, mainly in the urban area. However, due to the self-reliance policy, the energy sector lagged and stuck to a coal-based technology for many years.
Staying away from international markets to reduce the possible damages in the late 1970s and later finally showed its harmful effects. Air and environmental pollution by relying on coal as the leading energy source are challenges that India still in 2021 should face.
Pollution in Cities
Most of the top 20 most polluted cities in the world are in India that is a long-term impact of a coal-based energy mix.
Fortunately, since 1991, India started its economic reform that had positive effects on its energy market. An energy transition toward clean energy sources is not a dream anymore as India has opened its doors to the global market.
Nowadays, India could use the benefit from trade by using the existing technology in the worldwide market. Employing skilled workers in the energy market is also an advantage of an open economy for this country.
Showing features of the advanced economies
India shows some features of advanced economies in its energy sector by moving toward energy sources such as solar, wind, or even natural gas. Emerge of the LNG market in 2004 shows that the energy sector in India is changing toward modern technology.
Coal, as a labor-intensive industry, provides job opportunities for hand workers, while most new energy sources are capital-intensive. As a capital-intensive industry, LNG offers job opportunities for skilled workers that generally belong to middle-class families. Solar and wind powers have the same situation as well.
The Dual Economy and shrinking job opportunities
It looks like those shrinking job opportunities during both economic and energy transitions are a challenge for Indian policymakers in the following decades.
Besides using more energy sources in India, the energy transition could help this country meet its high growth rate constantly. However, capital-intensive energy sources could affect India’s labor force market negatively.
Air and environmental pollution create hidden expenses for the government that makes positive aspects of energy transition outweigh its disadvantages.
It seems that the character of the energy market in India is changing from an undeveloped section to a developed one. A sector with fewer job opportunities for unskilled workers that enjoy international sources as well as skilled workers.