Energy is a key input for the socio-economic development of a country, particularly for countries like India. Hence, it is important to holistically and objectively understand and assess the country’s energy sector, so that policies and interventions can be appropriately prioritized to further the country’s development. This report develops a comprehensive energy sector assessment index for such an assessment of India's energy sector, by considering not only energy demand and supply but also the relationship and impacts of the energy sector on society, environment and the economy. The index should be periodically computed to understand the energy sector and trends within it. As a beginning, this report presents the energy sector assessment index for India for 2011-12. This assessment throws up some interesting insights.

Popular discourse suggests that the most pressing problems faced by India's energy sector are an inability to attract investments due to the pricing and subsidy structure, delays in granting clearances and the financial implications of increasing energy imports. While these may indeed be issues of concern, they only focus on the supply side. In contrast, our analysis shows that the supply dimension is the strongest dimension of the Indian energy sector with a score of 69, while the demand dimension scores the worst with just 40. The environmental, economic and social dimensions also do not fare very well with scores of just 43, 45 and 51 respectively. This perhaps explains the increasing resistance to energy projects, as it seems citizens most affected by these projects more often than not face the negative impacts of energy projects but do not enjoy their benefits. Therefore, there is a great need to focus on the demand and socio-environmental side of the energy sector in addition to the commonly understood issues listed above, if energy is to truly act as an input to human development.

An article based on this report appeared in the May 2014 issue of Yojana published by the Planning Commission of India.