Sabysachi Majumdar, Group Head, ICRA Ltd
The Union budget has favourable proposals for the power sector which include increased allocation towards rural electrification scheme under the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and measures to augment solar project capacity addition. The progress towards 100% rural electrification target by May 2018 as announced in the budget for previous FY is on track and this coupled with higher funding support under DDUGJY is likely to gradually improve the energy demand and hence, the PLF levels for power generation entities to some extent. The demand is also likely to be supported by increased budgetary allocation towards infrastructure segment (particularly roads, housing and railways) which in turn will lead to an increase in energy demand from the industrial sector. While these measures are likely to boost aggregate demand, an increasing focus on solar energy is likely to affect the energy demand for thermal power generation entities to some extent. The budget also highlighted that an amendment bill is proposed in Arbitration and Conciliation Act which will enable speedy resolution of disputes for PPP contracts. This is a favourable development for power generation projects, which have been affected by unviable tariffs quoted in past bids.
Vikram Aggarwal, Managing Director, Virtuaal Infra Power
The Union budget 2017 gives a lot of impetus to rural spending and roads which will in the long term boost up the economy. The reduction in income tax to MSME will benefit all corporates across sectors. However, the budget lacks any major stimulus for the manufacturing sector and there are no major policy reforms or benefits. The hydro sector has been languishing and was expecting a boost with priority lending, tax holiday. We hope MNRE and associated ministries will pick up the mantle and encourage hydropower projects in the country.
VP Mahendru, CMD, EON Electric
The Union Budget 2017-18 has come up with some interesting steps when it comes to the LED lighting industry. With rural development being one of the major focuses for 2017-18, there has been an increased allocation for rural electrification which will in turn benefit the manufacturing and sale of electrical appliances. It is a bold move by the government to put a target of 100 per cent electrification of villages by May 2018. The provision for 5 per cent tax exemption for companies whose turnover is less than Rs 50 crore is also commendable. The budget should have also targeted incentives and concessional interest rates for manufacturers of LED lighting products and projects keeping in mind that LED lighting can play a big role in enabling implementation of our government’s vision of 100 per cent rural electrification, and energy conservation. Establishment of Special Economic Zones (SEZs) for the LED lighting industry continues to be a critical priority for the industry.
Sunil Khanna, President and MD, Vertiv India
We believe that the government has focused on creating an inclusive budget for a transparently governed country... Personally believe that this budget holds a lot of promise for skilling youth in the country. This is something that various industry bodies including the CII, have always advocated. The fulfilment of the Bharat Net scheme along with schemes tailored for the MSME sector will help contribute to a viable and healthy startup ecosystem... Considering the power deficit situation in the country, the proposal to feed 7000 railway stations with solar energy will help in reducing dependence on conventional energy sources. The almost 1/3rd increase in resource allocation towards Integrated Power Development Scheme and Deen Dayal Upadhyaya Gram Jyoti Yojna (from Rs 7874 crore to Rs 10635 crore) is also a step in the positive direction.
Gagan Vermani, CEO and Founder, MYSUN
Transform, Energise, Clean India.’ Arun Jaitley just announced a remarkable budget with markets responding quite positively. Purely from a renewable energy perspective, we haven’t seen any major announcements apart from a 20 GW Phase 2 of the Solar Mission and 7,000 railway stations to be covered under the Solar Mission. It is not clear if this 20 GW is in addition to the 100 GW solar target by 2022 or included in the same. However, three events can have a major impact on the solar sector indirectly. One, there is a huge push on infrastructure spending (almost Rs 4 lakh crore allocated). Second, the government seems committed to reignite the real estate sector. The target to build 1 crore new homes should mandate usage of a 1 kW solar system per home as each of these homes will need power. That itself will add 10 GW rooftop solar. Third, the enhancement of the carry forward duration of MAT from 10 years to 15 years and the rationalisation of corporate tax for companies with a turnover less than Rs 50 crore would lead to increased profits for a lot of small sized solar installers, which could potentially lead to passing on of the benefit to end users, reducing solar system prices. The FM also talks about achieving 100% village electrification by May 2018, and a lot of it could be achieved from solar mini grids and other small solar installations. Apart from this, there isn’t much for the renewable industry to cheer about. We would have loved to see the Finance Minister slightly tweak his budget agenda as ‘Transform India with Clean Energy’.