World Energy Outlook 2007

Key Assumptions
The Reference Scenario takes account of government policies and measures
that were enacted or adopted by mid-2007. However, not all of these policies
are assumed to be fully implemented in the Reference Scenario. Lack of coordination
among government departments and over-ambitious targets have
resulted in a poor track record of policy implementation. 1 Full implementation
of these policies is considered in the Alternative Policy Scenario, along with
implementation of other policies which are now in contemplation or seem
likely to be adopted.
The Reference Scenario projections assume that India’s gross domestic product
(GDP) will grow on average by 7.2% per year from 2005 to 2015 (Table 16.1).
Growth is assumed to slow thereafter, bringing down the average for the entire
Outlook period to 6.3% per year. 2 In the short and medium term, both
infrastructure investments and continued market reforms, particularly in the
power sector, are expected to support faster growth. The share of agriculture in
GDP is assumed to decline by 5 percentage points over the Outlook period,
while the share of the services sector rises by 4 percentage points. The output
gains from labour migration from agriculture to services and, to a lesser extent,
to industry, are expected to continue to contribute to economic growth.
Table 16.1: GDP and Population Growth Rates in India in the Reference
Scenario (average annual rate of change)
1980-2005 1990-2005 2005-2015 2015-2030 2005-2030
GDP 5.9% 6.0% 7.2% 5.8% 6.3%
Population 1.9% 1.7% 1.4% 1.0% 1.1%
GDP per capita 4.0% 4.2% 5.7% 4.7% 5.1%
India’s rate of population growth is declining, from some 2.1% per year in the
1980s to 1.7% per year from 1990 to 2005. This Outlook assumes that the
population, which stands at 1.1 billion, will increase by 1.1% per year on
average to 2030, reaching 1.45 billion. 3 India’s population is growing faster
than China’s. According to the United Nations Population Division, India is
expected to become the most populous country in the world in 2031. Over
70% of India’s population lives in rural areas today; this share is expected to
drop to 59% by 2030.
1. To address this, Prime Minister Singh created the Energy Coordination Committee in 2005 (see Chapter 15).
2. The High Growth Scenario (Chapter 19) explores the impact on energy demand of even higher growth than
is assumed here.
3. Population assumptions are based on the United Nations’ report, World Population Prospects: The 2006
Revision (UNPD, 2007).
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World Energy Outlook 2007 - INDIA’S ENERGY PROSPECTS