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N-deal to boost India's energy production

July 23, 2008 17:47 IST
With the government emerging victorious in the confidence motion, the country would be  signing the civilian nuclear deal with the US which has the potential to significantly boost India's nuclear energy production, says a report by Moody's economy.com.

"Following two days of vigorous debate, India's parliament on Tuesday pushed through a government motion that should see the world's largest democracy sign a civilian nuclear energy agreement with the United States.

"Despite not having signed the nuclear non-proliferation treaty, the agreement could see India gain access to US civilian nuclear technology as well as end sanctions  preventing purchases of American uranium," Moody's economy.com, an associate of global rating agency Moody's, said in a report.

According to the report, the deal with the US has the potential to boost India's nuclear energy production which currently accounts for only three per cent of the electricity supply.

"... with the deal still having a long way to go before being formally signed by the nation's leaders and more political wrangling is likely. This means that Indians
will do doubt have to wait some time before they see the benefits of the agreement in the form of greater, and more secure, energy production," Moody's economy.com's associate economist Nikhilesh Bhattacharyya said.

Noting that the deal has "probably passed its toughest test", the report pointed out that it remains important in securing the country's long-term "energy future."

The agreement still has a long way to go, requiring approval from the International Atomic Energy Agency and the US legislature before receiving signatures of President Bush and Prime Minister Manmohan Singh. Moody's economy.com report, titled 'India Set for Historic Energy Deal With the US', said the country's deficit between total primary energy consumption and production has been on the rise. For instance, the energy deficit grew over 20 per cent between 2000 and 2005.

"Considering that every year India's middle class is increasing and that at least half of the villages in many states are without access to electricity, drastic steps must be taken by policymakers to try and boost power supply and limit further growth in the energy deficit," the report added.

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