By Sravya V.
The Union Budget 2018 scheduled to be tabled on 1 February is much awaited as it would determine the policy and approach of the government in an uncertain environment. Worthy of attention ahead of the Budget is the fact that in the recent times, renewable sources of energy have consistently piqued the interest of various policymakers and bureaucrats.
Power building momentum for higher growth
Energy is one of the most important inputs for economic growth and human development. Electricity consumption is an important index for measuring the development level of a nation. India is the worlds sixth largest consumer of energy, accounting for 3.4 per cent of the worlds electricity consumption. The electricity demand in the country has increased rapidly and is expected to rise further in the years to come. Yet, the per capita energy consumption in India is lower than that of Africas and one-tenth of the USAs levels. According to to the World Economic Forum, though India is the third largest market in terms of gross electricity generation, it still has almost 250 million people without access to power. Overcoming this situation is very imperative in order to make Initiatives like ‘Make in India’ successful.
Trends in the budget allocation
In the previous years budget, a series of measures were announced to promote clean and renewable energy. A close examination of the 2017-18 budget shows that there was no direct measure to tackle the stressed power assets. However, it proposed an increased allocation of ?4,814 crores under the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY). DDUGJY is a scheme launched by the Government of India in 2015 to provide round the clock power to the rural households and for agricultural purposes. The government also retained the focus on 100 per cent rural electrification by 1 May 2018. As of now, according to the Ministry of Power, 99.7 per cent of the villages identified under the rural electrification scheme have been electrified.
The allocation for Integrated Power Development Scheme (IPDS) also increased in the budget. The IPDS was launched with the objectives of strengthening of sub-transmission and distribution networks in the urban areas combined with the IT enablement of distribution sector so as to reduce the transmission losses. It proposed an additional 20,000 MW to be added to the Solar Park Development Project. The solar park project was launched by the Ministry of New and Renewable Energy to encourage the construction of solar panels that can generate electricity between 500 MW and 1000 MW. Besides these initiatives, the taxes on parts and machinery required to manufacture solar power equipment were reduced considerably. The aim was to promote the domestic production of solar equipment.
Expectations from Budget 2018
Firstly, the industry expects a higher budgetary allocation to meet the funding requirements for rural electrification and energy efficiency driven projects. There is a need for a clear policy on the import duties for the PV modules (a network of solar panels having many solar cells). Adequate measures should be employed for the renewable energy sector.
Secondly, transmission connectivity is a fast-growing concern. Upcoming bids have fewer options for substations to which they can connect, and thus can drive up costs. Also, with the increasing share of renewable energy in the power consumption, policies should focus on the faster execution of the grid transmission network. Thirdly, stressed or underperforming assets should not only be financially reformed but their structure should be changed according to the needs. A regulatory framework for the stressed assets is the need of the hour.
Renewable’s future
Shifting to renewable sources of energy will not only help meet our climate goals. but will also play a huge part in Indias economic growth. There is a need to go beyond the conventional methods of investment and take into consideration prudent options like bonds and capital markets. This will also help in increasing the per capita availability of power in the country. Low-cost power generation in the non-conventional sources of energy should be encouraged.
Such reforms in the Indian energy sector will undoubtedly be the catalyst for the country to become one of the fastest growing economies in the world.
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