Thermal power has been predominantly the major component in India’s energy mix. Indeed, over 80% of total electricity produced by the utilities sector was from thermal power plants in FY2013. Hydroelectricity and nuclear power only played a supporting role in power generation, constituting respectively 11.79% and 3.41% of power generation in FY2013. Thermal and nuclear power generation witnessed growth of 15.36% and 1.81% in FY2013, whereas power generated by hydroelectric power stations declined 12.94% in FY2013. Hydroelectricity production tend to be seasonal, partially due to its reliance on weather conditions (with peak production during the August-September monsoon while bottoming out at January-February) while nuclear electricity production tend to be relatively expensive.

The total power generation capacity of the utilities sector also saw a boost of 11.74% to 223,344 Megawatts (MW) in FY2013, after expanding by a robust 15.12% in the previous year. Despite the additional generation capacity, India continues to face a significant challenge in meeting its power requirement. During peak hours in March 2014, all-India’s demand was 131,945 MW, compared to a maximum power supply of only 126,793 MW, implying an electricity shortage of 5,152 MW or 3.9% of the country’s energy requirement. Among Indian states, Jammu and Kashmir and Andaman Nicobar were the worst affected, with power deficiency of 21.1% and 20% respectively.

Lack of access to reliable energy poses a major hurdle to India’s economic growth. In addition to upgrading power generation capacity, structural reforms targeted towards improving the operational efficiency of the power sector are also critical for alleviating the imbalance in the supply and demand of energy resources. For instance, loss of electricity in the transmission and distribution process amounted to 218,644 GWh in FY2013, equivalent to 23.65% of the energy supply. India's success in resolving energy bottlenecks remains a key factor in achieving sustainable economic development.