Even as Prime Minister Narendra Modi refers to the recovering power demand as a sign of economic revival, the power companies are likely to face strong headwinds in the year ahead as well. India’s power sector performance is expected to see a significant decline in 2020-21, due to the prolonged disruptions caused by the coronavirus pandemic, said a report by Care Ratings. The easing of the lockdown and resumption of economic activity could lead to an improvement in electricity demand, however, there will not be a significant increase as the resumption of activity is expected to be gradual and limited, the report added.
The expected yearly contraction in the power demand is largely attributed to the weak industrial and commercial activity as the commercial and industrial sector accounts for a major portion of the overall electricity demand. Though electricity generation did not come under the ambit of lockdown, it was dramatically hit due to disrupted supply chain in the month of April and May. Consequently, the electricity demand and generation fell to a 5-year low during April – May 2020.
