India’s 2025 budget has introduced a focus on reforms across six specific domains, and one of which is the power sector. The strategy involves bolstering the nation’s economic development through its proposed engines of agriculture, MSMEs, investment and exports. The fuel for this development, en route to the country’s directive for achieving a developed status under its Viksit Bharat vision, shall be derived from the slew of proposed policy reforms. The power sector in India holds a cardinal position in the economy, serving to support its various crucial segments. Therefore, reforms for the enhanced performance of the Sector shall prove to be equally significant.  

Increasing energy requirements and Nuclear Energy Mission
The budget’s power sector reforms include a significant push for galvanizing nuclear energy to meet the country’s growing energy requirements. The nuclear energy mission pledges to augment India’s nuclear energy output to 100 GW by 2047. The mission focuses on the research and development of thorium-based small modular reactors (SMRs). Its investments are also directed towards developing 220 MW pressurized heavy water reactors (PHWRs), named Bharat Small Reactors (BSRs), a technology that India possesses expertise in. Other sectoral reforms include amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act (CLNDA). A careful analysis of these reforms shows the extent of the Mission’s significance in India’s bid for growth.

Energy in India is highly demanded among three entities. India’s aim for enhanced industrial productivity and general industrial expansion will require large amounts of stable electrical supply. Apart from production units, such an expansion would also entail IT hubs, data centres and AI-based technologies to help the energy transition. The 2025 budget has pledged increased agricultural productivity, and improved irrigation and supply chains. Without continuous and stable energy for irrigation and cold storage systems, complementary investments in agriculture will face avoidable losses. Finally, the country’s population growth has resulted in increased power demand for household, commercial and transportation needs. Ensuring stable electrical supply to these entities leads to GDP and productivity growth along with potential investments from energy-intensive industries, especially from the emerging semiconductor manufacturing and green hydrogen production systems.

Paradigm shift in investment in nuclear energy
The increased investment in nuclear energy in India not only provides low-carbon, base-load power, but also invigorates the country’s long-term energy security as well as environmental sustainability. Through reduced reliance on coal-based energy, the lean towards nuclear results in significantly reduced air pollution and greenhouse gas emissions, mitigating climate change effects. Unlike wind and solar energy, which possesses high variability of supply due to environmental dependence,  nuclear energy provides consistent, 24/7 electricity, ensuring stability in the grid even during extreme weather events. Such benefits are especially crucial in the sustenance of the country’s expanding electrical vehicle (EV) network, further reducing its carbon emissions. In parallel, it would help fulfil the Indian Railways’ electrification goal of net-zero emissions by 2030. Stable and uninterrupted supply of electricity would also encourage investment in battery gigafactories by private entities as a second-order effect. India’s current digital revolution is highly energy-intensive. Through low-cost supply from nuclear plants, grid failures are avoided and expedites India’s shift towards a cleaner, AI-driven economy. Additionally, as nuclear energy is crucial for India’s Green Hydrogen Mission, it makes it an important player in the decarbonization in heavy industries such as steel, cement, and chemicals, further reducing the country’s carbon footprint.

Nuclear energy also possesses certain natural advantages, which play a key role in the preservation of India’s ecosystems through minimal land and water footprint compared to other energy sources. Study suggested nuclear power plants generally require less land than solar or wind farms, reducing deforestation, land degradation and preserving its biodiversity. Moreover, thorium-based reactors tend to consume less water than their coal-power counterparts, enhancing their viability in relatively drier regions. Due to their man-made nature, the resultant characteristic climate resilience makes them more advantageous in current changing environmental conditions.

India’s investments in the nuclear energy mission create natural advantages beyond sustainability. For one, a nuclear plant’s independence of exogenous variables and reduced operation costs produces better benefits-to-cost compared to other renewable and non-renewable energy production systems. Moreover, the country’s existent thorium mines, holding 25% of the world’s supply, would perfectly complement its aim for self-dependence in nuclear fuel. The amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act (CLNDA) streamline administration processes by reducing redundant regulations and the degree of liability of suppliers in a nuclear incident. These changes will align closer to global standards, encouraging participation and investment from domestic and foreign private entities, precipitating the process of the Mission.

Risk versus global competition
The amendments to the two Acts are certainly beneficial and appear promising; however, there exists a perpetual risk, as with previous policy endeavours, of a lack of robustness in execution. Despite India’s capacity of power generation, per capita nuclear energy production remains alarmingly low compared to global standards. In contrast, a country like Sweden has made remarkable progress in nuclear power generation, despite its smaller economy.

Sweden, with a nuclear capacity of about 7,000 MWh, has minimized its reliance on nuclear imports. This achievement stems from decades of innovation and development, even as the country actively pursues a nuclear phase-out policy. Sweden is shifting away from fossil fuels under a national goal to be fossil-free by 2045, a mandate driven by public sentiment and government commitment. To achieve this, Sweden implemented key policies to ease regulatory barriers for nuclear projects, including simplified land acquisition processes. Additionally, the government introduced innovative funding mechanisms, such as government-backed loans, a ‘contract-for-difference’ pricing model for stable electricity rates, and minimum return guarantees for private equity investors. This blend of public-private support ensures profitability while encouraging further investment in nuclear energy.

Such efforts, marked by steady execution, highlight significant implications for sustainable energy development and emissions control. Sweden, for instance, consistently maintains per-capita CO₂ emissions lower than the OECD average, and its transition toward nuclear and renewable energy has further reduced emissions as suggested by the international energy agency. Moreover, further reductions are predicted due to continued investments in nuclear energy. With innovative methods to dispose of radioactive waste, such as Belgium deep clay and shale use techniques, the cost of disposition will also reduce.

Way forward
While developed countries have begun the phasing out process of nuclear plants, developing nations are beginning to exploit the benefits of nuclear energy. Despite the fact that nuclear energy production is technically a non-renewable process, its advantages in terms of power output and environmental sustainability make it a potent alternative for many developing nations, with India at the forefront. India’s proposed power sector aims and reforms, aligning with its long-term economic goals, are setting on a trend of rapid growth and development. The implementations of this budget will ensure stable energy supply along with multifarious positive second-order effects, namely in the spectrum of environmental preservation and improvement. In the long run, these shall make a significant difference as the country pushes towards achieving a developed-nation status while reaping the benefits of its choices.

Dr. Barun Kumar Thakur teaches economics at FLAME University, Pune. Mr. Parth Basankar and Mr. Shreyas Ramkumar are studying at FLAME University, Pune.

[The image at the top: a PHWR under construction at Kakrapar, Gujarat, in 2016: courtesy WikiMedia Creative Commons: https://commons.wikimedia.org/wiki/File:PHWR_under_Construction_at_Kakrapar_Gujarat_India.jpg]