Editor's note

Power Watch India - - NEWS -

The bud­get for 2016-17 was an anti-cli­max for the power sec­tor. Peo­ple’s ex­pec­ta­tions from this bud­get were quite high since the econ­omy is not in a good shape. Na­tion­alised banks are strug­gling to come out of NPAs, In­dus­trial out­put has de­clined, com­mod­ity prices are high and share mar­ket has dwin­dled. The power sec­tor was ex­pect­ing re­lief in this bud­get from the fi­nance min­is­ter. The bud­get has given mi­nor re­lief to the oil and gas sec­tor but fur­ther in­creased pres­sure on the gen­er­a­tion sec­tor which is al­ready reel­ing un­der tremen­dous un­cer­tainty due to fuel and barely man­ag­ing to sur­vive in the cur­rent mar­ket. No in­no­va­tive ideas were sug­gested in the bud­get and it was a rou­tine af­fair. It failed to give the re­quired stim­u­lus to the power sec­tor and on the con­trary dou­bled clean en­ergy cess on coal in the se­cond con­sec­u­tive bud­get, thus in­creas­ing the power tar­iff. Hope that Ujwal Dis­com As­sur­ance Yo­jana (UDAY) for state dis­tri­bu­tion com­pa­nies and Ex­port Pro­mo­tion Cap­i­tal Goods (EPCG) scheme for In­dian man­u­fac­tur­ers would im­prove morale of the power sec­tor.

EPCG was in­tro­duced by the govern­ment in the early 1990s with an aim to al­low ex­porters to im­port ma­chin­ery and equip­ment at af­ford­able prices to fa­cil­i­tate pro­duc­tion of qual­ity prod­ucts for the ex­port mar­ket. Un­der the For­eign Trade Pol­icy, the scheme al­lows im­port of cap­i­tal goods for pro­duc­tion at zero cus­toms duty on the con­di­tion that goods worth six times the duty saved be ex­ported in six years. The do­mes­tic pro­duc­ers do not ex­port much to com­ply with the obli­ga­tion un­der the EPCG scheme. In the past few years, the do­mes­tic power equip­ment ca­pac­ity was un­der­utilised as cheap im­ports flooded the mar­ket in many ar­eas. To sup­port do­mes­tic man­u­fac­tur­ing, the im­port of cap­i­tal goods is now not per­mit­ted un­der EPCG Scheme for gen­er­a­tion/trans­mis­sion of power. This will ben­e­fit multi­na­tional com­pa­nies who have man­u­fac­tur­ing units in In­dia as well as In­dian man­u­fac­tur­ers.

Out of the seven states that have signed the UDAY scheme, Pun­jab with a debt of about Rs 20,000 crore is the re­cent state to join the scheme. The state govern­ment has promised to take over 75% of this debt for in­ter­est sav­ings. Un­der the UDAY scheme, the state govern­ment will take over 75 per cent of the elec­tric­ity dis­tri­bu­tion util­i­ties’ debt and re­fi­nance it through bonds. The re­main­ing 25 per cent of the debt of dis­tri­bu­tion util­i­ties are re­fi­nanced through stategovern­ment backed dis­com bonds.

There is a need to boost morale of the power sec­tor which is a ba­sic in­fra­struc­ture for in­dus­trial growth. No new in­vest­ment is com­ing in this sec­tor since the last few years and un­less ma­jor ini­tia­tives are taken, in­dus­trial slow­down is ev­i­dent as a re­sult of power short­age.

Jayant D Kulka­rni

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