Budget fails to cheer clean energy sector

‘Unlike rail and roads, tax free bonds have not been specifically proposed’

March 01, 2015 12:13 am | Updated April 02, 2016 07:05 am IST - CHENNAI:

The government has set an ambitious target of generating 175,000 MW of energy through renewable energy sources by 2022. In this, solar is expected to contribute 100,000 MW. Photo: M. Periasamy

The government has set an ambitious target of generating 175,000 MW of energy through renewable energy sources by 2022. In this, solar is expected to contribute 100,000 MW. Photo: M. Periasamy

Though budget reiterated government’s ambitious capacity addition plans in renewable energy sector, it failed to talk about funds towards development of clean energy, feels the industry.

Besides seeking priority sector lending status, the industry was expecting government announcements with regard to access of low cost funds and various other avenues such as ECBs (external commercial borrowings). But no announcement was made on finance side.

The government has set an ambitious target of generating 175,000 MW of energy through renewable energy sources by 2022. In this, solar is expected to contribute 100,000 MW, followed by wind (60,000 MW), biomass (10,000 MW) and small hydro (5000 MW). As of December 2014, India’s total renewable energy installed capacity stood at 33,792 MW.

However, it would require about Rs. 250,000 crore of investments to reach this target, according to industry estimates.

“We have not seen any concrete measures in the budget for renewable energy. Unlike rail and roads, tax free bonds have not been specifically proposed for renewable energy. Given this, any funds from tax free bonds will now have to come out of the general pool of infrastructure bonds,” said Anish De, Partner – Infrastructure and Government services, KPMG India.

“Also, the proposals for the utilisation of funds from the increased coal cess are yet to be spelt out. It would have been better to propose specific allocations and measures for renewable energy, especially on availability of low cost funds for the renewable energy sector,” he added.

However, the proposal to increase the clean energy Cess Rs.100 to Rs.200 will benefit the industry as it would significantly boost the National Clean Energy Fund (NCEF) to finance clean energy and related initiatives.

Total collection so far under NCEF was Rs.17,084 crore and 46 clean energy projects worth Rs.16,511 crore have been recommended for funding out of the NCEF till September 2014.

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