India's energy crisis is structural, not a coal shortage

After the US-Israel-Iran conflict began on February 28, 2026, the Strait of Hormuz was effectively blockaded. More than 80% of India’s fuel imports passed through this strategic waterway, and its closure dealt a major blow⁠ to India’s energy security. On March 9, External Affairs Minister S. Jaishankar, speaking in the Indian Parliament, acknowledged that the conflict in West Asia posed a “serious” threat to India’s energy security.

At the same time, Petroleum Minister Hardeep Singh Puri assured⁠ that there was no fuel shortage in India and accused the political opposition of creating a false narrative.

Six months later⁠, at an Asia Society event in New York on September 30, Jaishankar himself acknowledged that India’s energy-resource reserves were “extremely limited” and warned that the world could face a “major food crisis” in the coming months.

India’s power crisis is never something that happens “suddenly”; the sector has been structurally weakened. Coal accounts for 52.8% of India’s total installed power capacity, but because of high plant load factors, coal generates around 75–77% of the country’s total electricity.

By September 2026, this structural trap had become even more evident. Due to an El Niño-induced drought⁠, hydropower generation fell 12% compared with the previous year, forcing coal- and gas-based generation to rise by 18% and 64%, respectively. After sunset, the power deficit reached 7.7 GW—higher than during the summer heatwave. According to the Central Electricity Authority’s daily coal-stock report of September 21, 76 of 188 power plants were classified as being in the “critical” category. Total coal stocks stood at 22.7 million tonnes, just 39% of the required 57.9 million tonnes. Meanwhile, around 76 million tonnes of coal were lying at Coal India’s pitheads. In other words, there was no shortage of coal itself; the supply system had broken down.

According to a Business Standard⁠ report dated September 28, coal stocks at 77 of 190 thermal power plants had fallen to “critical” levels. Total stocks stood at just 21.98 million tonnes, 24% lower than the 29 million tonnes recorded on August 31. The government was forced⁠ to direct companies with more than 50 MW of captive coal-production capacity to operate at full capacity on an emergency basis.

Contrary to External Affairs Minister Jaishankar’s earlier claim that there was “no power shortage,” the reality was that India did not face a shortage of coal production. Rather, due to failures in supply management, railway transportation and the financial distress of distribution companies, coal was unable to move from pitheads to power plants.

India’s dependence on coal is not merely economic; it is also social. Millions of workers are employed in economies centred around coal mines and thermal power plants.

In May 2026, India’s peak power demand crossed an all-time high of 270.82 GW. In September, the nighttime power deficit reached 7.7 GW. A significant share of this demand was met through coal, which still accounts for around 70% of India’s electricity generation.

But this dependence on coal is not declining; it is increasing. Between April and August 2026, coal-based power generation rose 9.1% compared with the same period the previous year. The politics of the energy transition remains dependent on coal⁠, making the crisis India faces in 2026 even more apparent.

In fact, the world is witnessing a continued rise in fossil-fuel use rather than a decline. Data from September 2026 reinforces this analysis. After the closure of the Strait of Hormuz⁠, India’s crude oil supplies fell by 20%, LPG supplies by 12%, and LNG supplies by 16%.

The LPG crisis hit ordinary households most severely. India imports around 60% of its LPG demand⁠, with a significant share passing through the Strait of Hormuz. During the first 15 days of March, LPG consumption in India fell by 17.7%. In Kolkata, the price of commercial cylinders rose from ₹1,800–2,000 to ₹3,000–6,000 on the black market.

The financial distress of discoms has further deepened the crisis. In March 2026, the total outstanding dues of discoms stood at around ₹3,330 crore, while nearly half of the utilities were still operating at a loss, with their cash deficit expected to rise again in the 2026–27 financial year.

It is also important to remember that simply increasing investment is not a solution. Investment in the electricity sector must be linked to public ownership.

The relevance of this proposition is becoming increasingly clear in the context of India’s 2026 crisis. Private oil marketing companies Reliance and Nayara Energy began rationing diesel and petrol sales. In India, Jio-bp limited diesel sales to 50 litres per customer per day. Even the Lawyers’ Canteen at the Delhi High Court had to stop serving hot food because of an LPG-cylinder shortage. Both private and state-run systems in India have failed to adequately address this fuel crisis.

There is therefore a need to bring power generation, transmission and distribution systems back under full public ownership and to “demarketise” them. However, these public energy companies must prioritise public interest over profit.

Drawing on the legacy of the 1955 Bandung Conference and the New International Economic Order of the 1970s, there is a need to build a new international energy network led by countries of the Global South.

In March 2026, India’s imports⁠ of Russian crude nearly doubled, reaching 2.25 million barrels per day (bpd), accounting for roughly half of its total oil purchases. By September, however, this had fallen to 1.75 million bpd, the lowest level since April 2026. As Russian supplies⁠ declined, India was forced to purchase more expensive crude from West Asia.

Russian oil may have helped India manage the crisis, but it is not a long-term solution. Such crisis management cannot resolve structural problems.

Jaishankar’s earlier claim that there was “no power shortage” was only partially true. At the time, India had been able to cushion its fuel-supply system to some extent through Russian oil. But in September 2026, he himself acknowledged that the energy market was “extremely tight” and that the situation was deteriorating.

India’s energy crisis is structural. Excessive dependence on coal, the financial distress of discoms and failures in supply management have remained broadly unchanged from 2022 to 2026. Although the use of renewable electricity has increased, it has not been able to displace coal consumption. Overdependence on the private sector and the “de-risking” model have also proved inadequate.

The root cause of the energy crisis, therefore, is not a “coal shortage.” It is the combined result of failures in government planning, coordination and financial management. India’s 2026 crisis is a consequence of these systemic weaknesses. Although discoms’ outstanding dues have declined, their financial foundations remain fragile, while coal stocks at power plants have reached critical levels. Despite diversifying its energy imports, India remains heavily dependent on the Strait of Hormuz.

What is therefore needed is an exploration of a “public pathway”—one that restores state-owned energy institutions, demarketises energy resources and gives them a public-interest mandate. Such a pathway could offer an alternative direction for India’s power system and potentially serve as a model for the wider world.

Several of External Affairs Minister Jaishankar’s statements may be diplomatically necessary for the country, but the real solution to this energy crisis lies in a structural transformation of India’s energy and electricity systems, rather than in temporary crisis management.