India in the month of April 2015 announced that it would buy $280 million worth of Uranium from Canada over a span of 5 years, thus ending a 40-year silent enmity they shared. The enmity was over India’s unwarranted use of Canadian technology to build nuclear weapons, which didn’t go down well with the Canadians. So why has Canada ended the animosity and why does India want Uranium? What does the deal mean for Indians?
Uranium is nuclear technology. Nuclear can be used for civilian purposes, specifically for generation of electricity. At a time when power cuts are frequent and the population is exploding, any technology that can generate electricity for its 1.2 billion people is pure gold. India’s coal industry is down in the dumps (read here why) and solar power is out of the reach of most of the population in the country. Hydropower generation is plagued with legislative issues in India, which makes it a dull investment option. With nuclear technology, India plans to build 40 new nuclear reactors by 2032 to generate 63000 megawatts of nuclear electricity (Biswas, 2015). As of 2015 nuclear electricity stands at only about 5800 megawatts (GovernmentofIndia, 2013). If it installs enough nuclear reactors, India will be able to meet the electricity deficit of about 4000 megawatts which it faces every year. The Indo-US nuclear deal which was finally signed in January 2015 after a 10-year logjam came at a major compromise on India’s part. Obama agreed to supply India with nuclear technology only after Indian Prime Minister Narendra Modi agreed to his condition that American companies will not be 100% liable for damages in the event of a nuclear disaster like the Bhopal gas tragedy. Majority liability was transferred to Indian insurance companies that will compensate the victims if any major accident occurs in the nuclear site (Reuters, 2015).
But nuclear technology supplied by America is not enough to satisfy India’s humongous appetite for electricity. Anticipating more power-related issues in the future, PM Modi went shopping for more nuclear power in France and now Canada. While the France deal was for establishment of nuclear reactors in India, from Canada India wants only Uranium concentrate. Canada is the second largest supplier of Uranium concentrate in the world. But how does this deal benefit Indians?
As of 2011, only about 67% households in India had access to electricity- which means that a third of the population (mostly in rural areas) lives in complete darkness and has to battle the forces of nature without energy assistance (GovernmentofIndia, 2011). India’s vision for power generation for the next 20 years is such that over 95% households should be electrified and also have constant supply of electricity. Long power cuts are common in rural parts of India (and in some urban areas too) which is due to deficit in power generation. With nuclear energy and optimizing thermal power, India aims to eliminate this annual electricity deficit. 24×7 supply of electricity means better work output, enhanced standards of living and reduced need for migrating to bigger cities of India. Therefore even though the Indo-US civilian nuclear deal has come at a price, it is for the greater good.
- Biswas, S. (2015, January 26). Will the India-US nuclear deal work? BBC News. New Delhi. Retrieved from http://www.bbc.com/news/world-asia-india-30978152.
- GovernmentofIndia. (2011). Source of Lightning: 2001-2011. New Delhi. Retrieved from http://www.censusindia.gov.in/2011census/hlo/Data_sheet/India/Source_Lighting.pdf.
- GovernmentofIndia. (2013). Growth of electricity sector in India from 1947-2013. New Delhi. Retrieved from http://www.cea.nic.in/reports/planning/dmlf/growth.pdf.
- Reuters. (2015, February 3). Factbox: The U.S.-India nuclear deal. Reuters. New Delhi. Retrieved from http://in.reuters.com/article/2015/02/03/india-obama-nuclear-idINKBN0L70AE20150203.
- Conditional CAPM analysis for stock-based investing - February 20, 2021
- Short term momentum analysis of growth, income and value stocks - February 9, 2021
- Inferential analysis to compare the performance of stocks listed in the BSE (2011-2020) - January 30, 2021