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29 the national bureau of asian research nbr conference report | october 2009 Prospects for India’s Energy and Geopolitical Roles in the Middle East Sumit Ganguly and Manjeet S. Pardesi SumIT GANGULY is the Director of Research at the Center on American and Global Security, holds the Rabindranath Tagore Chair of Indian Cultures and Civilizations, and is Professor of Political Science at Indiana University, Bloomington. He can be reached at . Manjeet S. PardeSI is a PhD student in Political Science at Indiana University, Bloomington. He can be reached at . 31 INDIA’S ENERGY AND GEOPOLITICAL ROLES u GANGULY AND PARDESI T he Indian economy has emerged as one of the fastest-growing economies in the world in recent years. The end of the Cold War in 1991 coincided with a serious balance-ofpayments crisis in India. In the midst of this crisis, the government of Prime Minister Narasimha Rao, together with then minister of finance Manmohan Singh, launched a series of structural reforms that introduced a new industrial policy and also led to the opening up of India’s financial sector. The net effect of these changes was the jettisoning of India’s model of socialist and autarkic economic development. After 1991, India began to embrace the open market and opened its economy to the wider world. In the period 1988–2006, the Indian economy has registered an average growth rate of 6.3% (including growth in excess of 8% per annum over the past six years).1 At the same time, with a population of 1.1 billion, India is the second-largest nation in the world and is projected to become the world’s largest over the next four decades or so.2 As a result, India faces daunting challenges to sustain rapid economic growth and pursue a strategy of poverty alleviation.3 The elasticity for energy (i.e., percentage change in per capita energy for every percentage change in per capita GDP) in India is close to unity for total commercial primary energy consumption as well as for electricity.4 According to Prime Minister Manmohan Singh, “The quest for energy security is second only in [India’s] scheme of things to food security.”5 To further highlight the significance of energy to India’s foreign and security policies, Singh mentioned that the quest for energy security had “become an important element of Indian diplomacy and…[was] shaping…[India’s] relations with a range of countries across the globe.”6 Currently, the Middle East accounts for more than two-thirds of India’s oil imports.7 Similarly, India is dependent on the Persian Gulf region for most of its imported gas (in the form of liquefied natural gas, or LNG). Comprising more than 40% of India’s total primary energy consumption, oil and gas are the two most important sources of energy for India after coal.8 Coal is likely to remain India’s principal source of energy for the foreseeable future, given that India is home to the fourthlargest reserves of coal in the world. India’s dependence on oil and gas is also expected to grow, however.9 Extrapolating from current trends, India’s dependence on oil imports is estimated to account for 91%–93% of the country’s oil consumption by 2031–32, while also being dependent on imported gas for more than 10%–11% of total gas needs.10 The Middle East will probably continue to provide the bulk of India’s oil imports (supplemented by imports from Africa and Central Asia), 1 Though piecemeal reforms were implemented in the 1980s, the 1991 reforms were more comprehensive and structural in nature. For details, see Arvind Panagariya, India: The Emerging Giant (New York: Oxford University Press, 2008). 2 “India Population ‘To Be Biggest,’” BBC News, August 18, 2004, 3 Manjeet S. Pardesi and Sumit Ganguly, “Energy Security and India’s Foreign/Security Policy,” in Indian Foreign Policy in a Unipolar World, ed. Harsh Pant (New Delhi: Routledge, 2008). 4 This measure emphasizes the relationship between changes in per capita GDP and changes in per capita energy consumption. See “Draft Report of the Expert Committee on Integrated Energy Policy” Planning Commission, Government of India, December 2005, 21–26, http:// 5 Edward Luce and Quentin Peel, “Prime Minister Dr. Manmohan Singh’s Interview with Financial Times,” Ministry of External Affairs, May 11, 2004,


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