Bud­get anal­y­sis 2017-2018

Let us take a look at the Bud­get and its ram­i­fi­ca­tions, says R Srini­vasan.

Power Watch India - - COVER STORY OVERVIEW -

The last two years have wit­nessed an in­crease in the share of so­lar in the coun­try’s en­ergy mix. The in­dus­try has also man­aged to drive tar­iffs down from Rs 12 a kilo­watt hour in 2010 to a his­toric low of Rs 3 in 2016. Now in Bud­get 201718, Fi­nance Min­is­ter Arun Jait­ley has an­nounced a se­ries of mea­sures such as 20 gi­gawatts (GW) of so­lar ca­pac­ity ad­di­tion and so­lar­is­ing about 7,000 rail­way sta­tions in the medium term apart from higher spend­ing on ru­ral elec­tri­fi­ca­tion, among other mea­sures. In Oc­to­ber 2016, RE made up 15 per cent of In­dia’s in­stalled elec­tric­ity pro­duc­tion ca­pac­ity, up from 13.1 per cent in Au­gust 2015, ac­cord­ing to govern­ment data. To achieve its tar­get, In­dia must add 130.76 GW of re­new­able en­ergy over the next six years, an av­er­age of 21.7 GW per year or, three times the ca­pac­ity it added in 2016. The power sec­tor’s ex­pec­ta­tions and what poli­cies Bud­get 2017 should have con­tained have been cov­ered in ex­ten­sive de­tail in our com­pre­hen­sive In­dus­try Speak sec­tion.

Queried about Bud­get 2017, Ru­dranil Roy Sharma, GM and Se­nior Con­sul­tant and Aditya Ravin­dran, Con­sul­tant, (En­ergy Ver­ti­cal), Feed­back Busi­ness Con­sult­ing Ser­vices Pvt Ltd, said, “The present govern­ment has been tak­ing good care of the power sec­tor for the last 2½ years. Due to the strate­gic na­ture of in­vest­ments and in­cen­tives that had been an­nounced for the en­ergy sec­tor in the past bud­gets, ex­pec­ta­tions of the power in­dus­try with this year’s bud­get were low. We feel this year’s bud­get has hit all the right notes and re­it­er­ated in­tent. The bud­get has promised to bring with it a strong fil­lip for the in­fra­struc­ture seg­ment. Among the many in­fra­struc­ture plans, the power sec­tor was also able to bag some ini­tia­tives that would leave a last­ing im­pact. Re­new­able en­ergy and Power for All have been flag­ship schemes of this Govern­ment’s Min­istry of Power for the past few years. This year too, their com­mit­ment to­wards these mis­sions has been re­it­er­ated through this bud­get an­nounce­ment. The Govern­ment has pro­posed to im­ple­ment another tranche of so­lar power ca­pac­ity ad­di­tion to the tune of 20,000 MW through its sec­ond phase of So­lar Park scheme.

The govern­ment con­tin­ues to stand by its prom­ise to elec­trify all the vil­lages in the coun­try by May 2018. In this re­gard, an in­creased al­lo­ca­tion of Rs 4,814 crores has been pro­posed un­der the Deen Dayal Upad­hyaya

Gram Jy­oti Yo­jana dur­ing this year.

At the same time, the In­dian power in­dus­try has been see­ing sub­dued growth in the off-take of power. The re­sult has been that the power plants are strug­gling un­der medi­ocre ca­pac­ity util­i­sa­tion val­ues/plant load fac­tors. High in­vest­ment in in­fra (rail, road and ship­ping), hous­ing, and agri­cul­ture in this bud­get will gen­er­ate more de­mand for elec­tric­ity in the coun­try and help the cause to a great ex­tent.

The bud­get also pro­poses to cut down im­port duty on cer­tain cap­i­tal equip­ment goods. Fuel cell based power gen­er­at­ing sys­tem, bal­ance of sys­tems op­er­at­ing on bio-gas / bio-meth­ane / byprod­uct hy­dro­gen are few such tech­nolo­gies. The re­duced im­port du­ties would def­i­nitely help to grow these fu­tur­is­tic re­new­able tech­nolo­gies.

Among the pop­u­lar power gen­er­a­tion tech­nolo­gies, so­lar and wind en­ergy have re­ceived a small quan­tum of re­lief from im­port du­ties. Tem­pered glass used on so­lar pho­to­voltaic pan­els, and some of the resin and cat­a­lyst used in cast com­po­nents for wind en­ergy equip­ment have been ear­marked for re­duc­tion in im­port du­ties. Although, this re­duc­tion would only have a tiny im­pact on so­lar and wind power de­vel­op­ers, the ac­tual ben­e­fit here is be­ing aimed at pro­mot­ing the man­u­fac­tur­ing base for the equip­ment used in these in­dus­tries.

The in­te­grated rail bud­get plans to take the In­dian Rail­ways light years ahead of its cur­rent po­si­tion. On the en­ergy front, the rail­ways have been try­ing to im­prove re­liance on re­new­able en­ergy. As part of the pre­vi­ous bud­gets, the rail­ways had pro­posed to power 7,000 of its sta­tions with so­lar power. Of these, 300 sta­tions have seen some de­vel­op­ments in this re­gard and it is pro­posed that works in another 2,000 sta­tions would be taken up dur­ing the com­ing year.

Sim­i­larly, another ini­tia­tive on the part of the rail­ways – Swachh Rail, waste-to-en­ergy based projects are now be­ing in­tro­duced in the rail­way sec­tor. The bud­get pro­poses to act on five such projects de­pend­ing on the suc­cess of pilot projects be­ing car­ried out at Delhi and Jaipur rail­way sta­tions.

The low­er­ing of cor­po­rate tax from 30% to 25% for com­pa­nies with an an­nual turnover up to Rs 50 crore will help the MSME sec­tor and pro­mote en­trepreneur­ship. It is com­mend­able that with this move, the govern­ment is cut­ting some slack for close to 6.67 lakh com­pa­nies that fall into this bracket while for­go­ing rev­enue of about Rs 7,200 crores.

In the en­ergy do­main, or­gan­i­sa­tions in­volved in vil­lage elec­tri­fi­ca­tion/ mi­cro­grid, en­ergy au­dits, de­mand side man­age­ment, en­ergy con­sult­ing ac­tiv­i­ties etc, will be ben­e­fited due to this. Although, this year’s bud­get does not plan to take any large strides for the power sec­tor, the small steps that have been taken add up to a pack­age that sat­is­fies al­most all the stake­hold­ers in the power sec­tor value chain. And this in it­self is a job worth of high praise.”

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