India's energy intensity falls 30% since 1991, easing oil shock risks

This means that while the economy may use larger amounts of energy on an absolute basis as it grows, it is now generating more output per unit of energy consumed than before

India's economy is significantly more energy efficient than it was during the 1991 balance of payments crisis, when a surge in crude oil prices contributed to the depletion of foreign exchange reserves and forced the country to seek an international bailout.

 

India's energy intensity fell 30 per cent to 0.96 kilowatt-hours (kWh) per dollar of gross domestic product (GDP) in 2022 from 1.37 kWh per dollar in 1991, according to Business Standard calculations based on data from Our World in Data. The figures use international dollars at 2011 prices, adjusted for inflation and purchasing power parity (PPP). 

 

Energy intensity — a measure of the amount of energy required to generate a unit of economic output — has also fallen well below levels seen during other periods of economic stress, including the oil shocks of the 1970s, the global financial crisis in 2008 and the taper tantrum of 2013.

 

More recent government data suggest the trend has continued. The Energy Statistics India 2026 report shows energy intensity declined another 1.26 per cent between 2022-23 and 2024-25. 

 

The decline implies that while India's overall energy consumption has continued to increase as the economy expands, it now generates significantly more output from every unit of energy consumed, reducing its relative vulnerability to energy price shocks.

 

The improvement has accelerated since the turn of the century. The data show energy intensity has declined continuously for 22 years since 2000, with the pace of improvement gathering momentum even before the Covid-19 pandemic disrupted energy demand.

 

In 2019, India recorded a rolling decadal compound annual decline of 2.13 per cent in energy intensity, the fastest pace since the 1970s.

 

"Energy intensity of a country usually changes due to two main factors. One is energy efficiency-enhancing technological improvements that can occur on their own or due to government policies. The other factor is structural effect that includes economic structure shift, that is, from manufacturing and agriculture to services. This is because the service sector uses less energy per unit of GDP than manufacturing or agriculture," said Manisha Jain, Associate Professor at the Indira Gandhi Institute of Development Research.

 

She added that changes in the product mix within manufacturing also influence energy intensity.

 

"Shifting within manufacturing from more energy-intensive goods such as iron and steel or cement to less energy-intensive products such as textiles lowers overall energy intensity," Jain said.

 

A 2016 study, The Changing Energy Intensity in Indian Economy: A Sector-level Analysis Based on Input-Output Model, by Anjali Tandon and Shahid Ahmed of Jamia Millia Islamia University attributed the decline to industrial modernisation and improvements in power generation efficiency.

 

"The reduction in direct coal intensity of thermal electricity generation is explained due to adoption of cleaner technologies such as coal beneficiation that refers to the process of coal washing to reduce the ash content... This improved the efficiency of the coal circuits that now receive washed pulverised coal, which has much higher rates of oxidation," the paper noted.

 

Among major emerging economies, India's decline in energy intensity has been faster than that of China and Brazil, although slower than Russia. Advanced economies such as the United States, Germany and Japan have also recorded steeper improvements, reflecting differences in economic structures, technology adoption and energy mix.

 

"The need of the hour is to focus on energy efficiency and to bring down energy usage in all sectors, especially in industries and transport. This can also help further reduce India's energy intensity numbers. There should also be focus on the usage of clean energy like solar, wind and nuclear, and on energy independence. Nations across the world are also likely to step up efforts to improve conservation and focus on utilisation of local energy resources in their energy planning exercises," said K Ramanathan, Distinguished Fellow Emeritus at The Energy and Resources Institute (TERI). 

 

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For charts:   Source: Our World in Data (U.S. Energy Information Administration (2026); Energy Institute - Statistical Review of World Energy (2025); Bolt and van Zanden – Maddison Project Database 2023), Business Standard calculations   Note: The data looks at the drop in energy intensity measured by Our World in Data in terms of primary energy consumption per unit of GDP, in kilowatt-hours per dollar after adjusting for inflation and differences in cost of living.  Primary energy is energy available in resources before transformation, example, coal before it is burnt.  The numbers represent drop in India's energy intensity as of 2022 from previous crisis years.