The last two days at the Vienna Energy Forum, and come back from there as I concluded yesterday evening at a Financial Times dinner with renewed enthusiasm and renewed vigour to pursue a clean energy agenda for India. More particularly on the back of very successful bidding of renewable energy projects, we have been able to change the rules of the game, make it far more honest, far more sustainable, a very predictable and stable and simple policy regime for the power sector, particularly, for the renewable energy sector.
We have been able to look at good counterparty risks intermediating between the suppliers of power or producers of power and the state distribution companies. And, the sum total of all of these initiatives has led us to discover a price, which was until yesterday 4 US dollar cents per kilowatt of solar power. And, as I got into the flight at Vienna this morning, it had already dropped by another 3 or 4%. So, in Indian Rupees, the last bid that has got approved is at Rs 2.44 per kilowatt hour of solar power.
Of course, the state is Rajasthan, which is blessed with far more sun than the rest of the country. Also, we have the Solar Energy Corporation of India (SECI) intermediating, it’s not a direct sale to a DISCOM. But, it does give one a lot of confidence about the ability of renewable power to be cheaper than thermal power today, to be actually more attractive so we are below grid parity in terms of renewable energy, as we speak today.
Why I mentioned this before I went on to a more macro positioning of India is because what we had set out to do about two and a half years ago, and I have been to London several times and discussed with different groups. I don’t know if any of you have had a chance to meet with me before. But, in each one of my engagements, I had talked about the courage of conviction that Prime Minister Modi had in clean energy, in the renewable energy programme, his confidence that honest procurement, economies of scale, intelligent planning and, of course, technological advancements will get us there, has proved to be right. He stands redeemed. His commitment to green energy has finally paid off, and as I often say, whilst very senior leaders of the world were talking about the inconvenient truth, Prime Minister Modi when he was the Chief Minister of Gujarat had already started working on ‘convenient action.’ You know, he came out with a book titled ‘Convenient Action’, soon after Vice-President Gore’s book titled ‘Inconvenient Truth’. And ever since then, last five-six years, he’s consistently followed a green path, an agenda for promoting clean energy in India, Solar of course, is turning out to be quite a success story.
Wind energy also has come down drastically in terms of pricing. The last contract which was bid out, and it was the only first bidding of 1 GW, discovered a price of about 5 US cents. My own sense is that will also look at more affordable levels in the near future.
India in the last 3 years has focused its efforts on creating an ecosystem where we are not looking at short term gains, we are not looking at short term plans. We are looking at bringing into India a framework which holds us in good stead for several years to come, in fact, several decades to come. The entire focus has been not on sorting out issues of an individual nature or sorting out problems faced by one or the other, the effort has been to create a framework which allows everybody an equal opportunity to invest, to do business, to work in India, helps people to look at the long term, create a environment where investment becomes easy, where the policy framework in different sectors is quite predictable, it’s simple to operate in.
And, each of the macro numbers that we have before us today, be it the world’s fastest growing large economy, be it a country which has met its fiscal deficit targets consistently and is now aiming to go down even lower. By 2019, we are looking at a 3% fiscal deficit at the centre.
Inflation is significantly down over the last 3 years, interest rates have seen softening of rates consistently over the last two and a half years. Exchange currency, if you look at the 3 year CAGR, has been quite reasonable, I would think it would be about 3-3.5% over the 3 year period. My own sense, and I have said this on more occasion than one that anybody who comes to India should take a longer term horizon, and on the longer term horizon the Indian Rupee is amongst the most predictable exchange rates. We may have had a few spikes and ebbs along the way, but on a longer term we have always managed to go by about 3-3.5% depreciation in the past.
On a personal note, I wish we would look at Rupee appreciations in the years to come going forward, which would mean great news for all the subscribers to Masala bonds. And, in every respect, you can see things far more robust in terms of an investment climate in India. FDI, probably, is at the highest ever in Indian history right now, and going forward, my own sense is that the Current Account will also be reporting surpluses, starting this year itself.
So, the long and short of it is that we are looking at a situation where the dreams that every Indian has for a better tomorrow are on the way of leading India towards greater prosperity. After all, a billion aspirational citizens is a huge market opportunity and we are very delighted that the people of India are aspiring for a far better quality of life than what they have as of today. Because I believe that you only aspire for more, aspire for better when you trust that the person running your country can deliver on your aspiration.
If you look back 4 or 5 years ago, the sense of despondency that had set into India, the kind of ‘this is how it’s gonna be, this is the kind of life we are going to get’, that mindset today has changed. Today, there is a mindset of want, there is a mindset of desire, there is a mindset of confidence in each one in the country that things are getting better and will only get better henceforth.
As they say, the best way to predict the future is to create it, I think A. Lincoln said that. And that’s what we are trying to do. We are trying to live our dreams. We are trying to live the dreams of every citizen of India. We are trying to accomplish things which were never accomplished before. And, therefore, if one had followed Prime Minister Modi’s statements before the elections when he became Prime Minister, he had focused on a few, in India you call it Mool Mantra, a certain basic principles, a certain commandments, on which he had promised his government would run. While, of course, there was the very implied, implicit and, in fact, even explicit promise of a corruption-free government on which score I do believe, internationally today, India is being recognized as a country moving out of the old age, moving into transparency, moving into equal opportunity for investments to everybody.
But he had talked about Speed, Skill and Scale, when government would carry out its functions, when the country would move forward. He had talked about minimum government and maximum governance. He had talked about doubling farmers’ incomes. He had talked about making India a manufacturing base, strengthening the Indian ecosystem to invite and attract and promote investments in the manufacturing sector. He had talked about making power available for all in the country, round the clock. He had talked about connecting the entire nation through digital technologies and having everybody enjoy what’s happening in the whole world, in the remotest corners of India. He had talked about making it easier to do business in India, making India more competitive in the comity of nations.
And I think on each one of these, the government has made very rapid progress. We have had serious engagement. We have had programmes designed on each one of these objectives. Sometimes some people ask us, why does the government have so many different programmes. You have the Clean India programme. You have the Digital India programme. You have the Power For All programme. We have the Financial Inclusion programme, where everybody gets connected with bank accounts. We have the programme to clean the rivers of the land. You are looking at getting LPG cylinders or piped gas into every home. Why is the government opening so many fronts at the same time?
And, to those I would like to say that really each one of these programmes dovetails from one to the other. They are all interlinked. After all, the Clean India Mission has a lot to do with the quality healthcare that we want every citizen to have. The cleaning of the rivers is intrinsically linked to better nutrition, to better, again better healthcare for the children and also to environment and pollution. When we talk of Power For All, I think power is that fulcrum around which the entire ecosystem of development would ultimately rest.
Yesterday, at Vienna, we were talking about eliminating poverty and Power For All, and how they too really mesh into one programme. You cannot remove poverty unless you make sure that electricity is available for all. Because electricity gives you connectivity, it helps you with mobile connectivity, it helps you with quality education, it connects children of today with what’s happening in the world. And the list can just go on and on and on.
So, keeping in mind this entire holistic development of a individual, the government has designed different programmes, effort is going on in different directions. We had promised power for all by 2022, when India completes 75 years of independence. On a personal note, I would love to do it by 2019, and I am committed and I am working to make sure that every citizen gets electricity by 2019, some off grid, most people through the grid. I am working to make sure no farmer ever has to lose his crop for want of electricity or water which he could pump up.
We are working to see how we can make the entire infrastructure, the ecosystem around power more robust, more sustainable. We are working to see how our energy mix can help us go into the next decade far more efficiently impacting greenhouse gas emissions on a positive note rather than negatively. And each one of these missions really bring in opportunities for business, bring in opportunities for investment.
In the tube, since we had a journey, and it’s much easier to work in the tube rather than in the car, my colleague and I were sitting and jotting down the possible investment opportunities. I thought I must try and reorient because I used to talk about a trillion dollar opportunity until about 2-2.5 years ago when I became the Minister for the first time. But I have never imagined that solar power is going to become one-third of what it was when I became a Minister. I have not imagined wind power to fall 40% in the very first bidding of 1 GW. At that point of time, I thought a smart meter is going to cost a 100 pounds, I didn’t know that we could possibly do it in 20 pounds, if not a little more or less. My own personal target is 12-13 pounds for a smart meter.
And, all of this is possible when you look at scale. Many of you may be aware what we have done with the LEDs. Prime Minister Modi is an evangelist who believes that energy conservation and energy efficiency is more important than energy generation, given the losses and the high level of losses in India, every kilowatt hour saved is really 1.3 kilowatt hour generated, and potential impact on the environment. So, we looked at our energy efficiency programme and found EESL, the Energy Efficiency Services Limited, selling 600,000 LED bulbs every year, and making a song and dance about it, and selling it at close to 8 pounds per LED bulb, with a government subsidy of a pound thrown in.
Prime Minister Modi said this is not done. Where is the speed in this programme? Where is the scale in this programme? And do it skillfully. And what did we do? We planned to do 770 million LED bulbs in 4 years. I am happy to report to you that in the first 2 years alone, we have been able to sell 500 million LED bulbs in India, 230 million by the same company EESL. So, what they used to sell in one year – 600,000 LED bulbs – they now sell in one day, 600,000 LED bulbs. That’s the potential of Indian companies or Indian businesses and the scale of opportunity that India provides. The private sector has sold another 270 million bulbs in these last 2 years. And I am now quite hopeful that by 2019, India would be 100% LED. Every streetlight in India, every light in the buildings, I wonder what this is?
If it’s not, I am happy to tell you that tomorrow we are launching EESL in London and we have named it the same name as we had in India. It’s called UJALA in India. And our launch tomorrow is going to be – UK Joins Affordable LEDs For All. So we have UJALA coming into, light coming into London via India tomorrow. And, maybe we could even do an MoU with the London Stock Exchange, bring down some of you electricity bills. Even the tube lights can be LED now by the way, and at very affordable prices. But, of course, London Stock Exchange can pay me top pounds also.
But really, that’s what is possible in India. Next stop – 250 million smart meters, replace every meter in the electricity network with a smart meter. We are looking at underground cabling. I am told Gujarat is planning to embark on underground cabling of all the municipalities in their state having run their energy infrastructure very-very efficiently.
So, that’s the scale at which Indian opportunity is coming up. While we did try to make a, hazard a guess on what kind of investments India would need until 2030 on the four sectors under me – Power, Renewable Energy, Coal and Mining. But we didn’t come to a trillion dollars this time around because now all the prices have changed. The LEDs which were being purchased for $4.5 by the government until 2 years ago, are now at just about 15% of that, prices have fallen 85% in 2 years. So, things have changed. Things have become far more affordable. And, we are using intelligent financing models. We are using the best of technologies in all our programmes. We are making sure India does not settle for second best. We are making sure that whatever we do, we will leapfrog into what’s the most modern and efficient way of working. And, I do believe that the time has come where India will lead the world, rather than follow the world in the days to come. We have very exciting plans going forward on a variety of areas.
I am sure Mr Gadkari would have talked about his very very ambitious plans on expanding and strengthening and improving the road network in India, which is very critical to the success of any economy, any country. We are looking at expanding the digital infrastructure very rapidly. You will be amazed at what’s happened on optic fiber. India had 358 kms of optic fiber laid until 2014 – 358 kms. Come 2017, we have crossed 200,000 kms only in 3 years. What does that mean, about 70 times or more? 70 times! Of course, the base was low, but in a country of the dimension of India to expand to 200,000 in less than 3 years just reflects the changing mindset, the changing confidence that government, the people and investors have in the country.
India is open for investments. I will invite all of you not to miss the buzz, because if you had invested in Masala Bonds 2 years ago, or a year ago, you would have got atleast a 150 basis points more. Today, I think, Baiswal, what’s the Effective Interest Rates on these bonds? 7.25! So, those who lose out on this opportunity, be prepared to earn less next time around. But, that’s the story that’s India, that’s the India of today – dreaming, working, planning, aspiring for a far better tomorrow. And I assure you ladies and gentlemen, that tomorrow is going to happen. We are committed to making it happen. I invite all of you to be a part of that journey.
May 11, 2017 Speaking at 'Vienna Energy Forum 2017' in Vienna, Austria