Energy policy options: Costs for the Indian economy

India's energy sector is today in transition. The principles of the public management which has prevailed up to now have to be revisited, as the present situation cannot be sustained in the future, neither in terms of financing nor in terms of physical performance of the sector. Both put at risk the health of the whole economy. Some choices have been made to remedy this situation. In particular, a multilateral agencies inspired reform process is at work, which seeks a rapid liberalization of the domestic energy supply market as well as prices decontrol. The aim is to rapidly improve the efficiency and volume of operations on the Indian energy scene. These options are designed to benefit the economy in a large way. However, they also have costs: for example that of the initial gestation period necessary for the private sector to take over the supply side. The idea of this paper is that it is possible to refine the energy policy so as to decrease or even minimize these costs. They might have been underestimated as of now. To prove this point, the paper proposes an alternative policy in which the pace and modes of the reform vary. It then assesses the costs of the two options, using a range of costs items. The comparison of the total amounts as well as of the profile of expenditure suggests the reform scenario as exists today map not be the optimal one.