The Kuznets curve posited that climate awareness and the need for green energy come about only when a society reaches a certain per capita income. As a rule, that would have meant lower-income countries such as India would have never realistically been able to gain political capital by advocating green energy, and in a democracy like India that would’ve been fatal for green energy goals. However, Mukesh Ambani’s vision for green energy in India at the International Climate Summit 2021 seems to bust the Kuznets hypothesis.
The conundrum has always been: how do you get a population facing a severe resource crunch and where day-to-day problems abound to embrace green energy for a future they have no time to plan for, being stuck in the here and now? So far, green energy has been the reserve of rich countries with significant disposable income to invest in new and emerging technologies, and as such catered more to social responsibility than social justice. However, this is where Mukesh Ambani’s reputation as a market disruptor comes in.
Instead of making the green energy question in India about the concerns of the haves, he has made it about the imperatives of the have-nots—effectively turning it into a powerful tool of social justice and hence giving it political resonance. To note, this is in fact a significant upgrade and modification of a good governance model that our current Prime Minister had introduced in Gujarat when he was the chief minister there. In his chief ministerial days, he had successfully divorced solar energy from costs, making it all about social justice instead. His administration had successfully electrified even the remotest villages in the Rann of Kutch by placing solar energy pylons in every single one of them.
Where Reliance has taken it to the next level is that it is focusing on democratisation of energy through reduction of costs of green energy. This, of course, plays to a known Indian strength called frugal innovation or what is called price point innovation. For long, the West used to scoff at price point innovation as not being “true innovation”. However, once India demonstrated the prowess of this concept by developing its mission to the moon on a shoestring budget, a lot of perceptions changed and in a sense what Modi started and what Reliance is betting on is exactly this.
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Green energy brought huge dividends for advanced countries; it created a whole new sector with a plethora of new-age jobs. This has always been problematic for India given our low industrial base and low human capital. But this is where Reliance seems to be breaking another new ground—in creating a green economy, with all the associated infrastructure and jobs. It takes into account the low propensity of consumption, low disposable income and low expertise, taking already proven technologies but reducing the costs. Well ‘what’s so great about reducing costs,’ I hear you ask. A lot, actually. You have to simplify logistics, you have to simplify production, you have to simplify the structure and design of the product itself, you have to increase its service life, and you have to improve its serviceability, all of which are critical to market adoption in India. As such, the term ‘price point innovation’ conveys a false sense of simplicity for what is in fact a deep, profound and far-reaching readjustment of the entire way of doing business, from procurement to manufacture to niche market creation.
In many ways, one can see this almost as the perfect public-private partnership where a political idea to give energy access to common citizens gets transformed into a war cry by the private sector, which then brings its own ability to bypass bureaucratic ossification and comes up not just with solutions but economically feasible solutions. What’s more, the dual emphasis on solar as well as hydrogen provides not just a roadmap for strategic energy security but also a new dynamo of innovation in the area of energy storage where the Chinese monopoly has been virtually impossible to break. If even half of the Prime Minister’s targets and Mukesh Ambani’s promises are met, it heralds a new age of energy independence, an elusive dream that India’s founding fathers found impossible to turn into reality.
In that sense, it embodies “Sabka Saath Sabka Vikas”—it reduces public expenditure and yet simultaneously provides more goods and services to the common man, it creates more jobs and safeguards existing jobs, all this while reducing not just energy dependency but also creating a vital counter to China, one that will be politically and ethically much more palatable to the West. Rest assured what we are seeing is the emergence of a New India, nothing more nothing less.
Abhijit Iyer-Mitra is Senior Fellow at the Institute of Peace and Conflict Studies. The views expressed in this article are those of the author and do not represent the stand of this publication.
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