Budget 2015 is a decisive step in the direction of realising the vision delineated by the Finance Minister Arun Jaitley in June last year. Like the Railway Budget unveiled on February 27, Mr. Jaitley’s second essay goes beyond being merely an accounting exercise and charts out a clear, well-contoured policy trajectory-oriented to the themes of growth and fiscal consolidation in a sustainable environment.
The budget reflects a clear appreciation of the need for pump-priming the country’s creaky infrastructure to enable it achieve its growth potential and, more importantly, to stay on the fast-track over a long-term. The thrust, therefore, is on sectors such as power, which could make or break its growth story. India cannot grow at double-digit pace without adequate power to drive its industries and light up its towns, cities and villages.
To address its core social issues such as poverty alleviation and job creation within reasonable time frames, India would have to grow at the pace projected in the 2015 budget and for that, it would need lots of power. The commitment to put renewable energy on the fast-track and achieve a level of 1,25,000 MW may appear improbable but is, without doubt, commendable. Equally, Mr. Jaitley’s proposal to set up five UMPPs (Ultra Mega Power Projects) is further testimony to the Modi government’s resolve to ensure that the country’s growth engine does not run out of steam. Also heartening is the outlay of Rs.61,400 crore for the sector. In its new refurbished avatar, the PPP (public private partnership) model of developing large power projects too should witness a positive turnaround. The steps announced in the budget should restore confidence among private players, who have turned averse to the sector over the last many years, marked by policy inertia, high cost of capital and uncertainty over the supply of fuels including coal. The conclusion of the coal auction process is sure to add to the positive sentiment. It needs to be understood that although 35 per cent of India’s generation capacity is privately-owned, during the last three years not a single new power project has been taken up by the private sector. However, the budget is not without its discordant notes. The increase in the clean fuel cess from Rs.100 to Rs. 200 per tonne will, without doubt, inflict further pain on a sector already burdened with a 6.30 per cent hike in the freight rates for coal announced only two days ago by Mr. Jaitley’s colleague in the Railway Ministry. Also, the budget is silent on several other structural issues dogging the sector involving power evacuation and distribution.
The author is Managing Director and Group CEO,
Jindal Steel & Power Ltd.