New Delhi: The Indian Electrical & Electronics Manufacturers’ Association (IEEMA), in its Pre-Budget memorandum, has appealed to the Finance Ministry to treat the power sector as a full-fledged infrastructure sector and extend all policy and fiscal support to it.
While presenting the Pre-Budget memorandum to the Ministry, IEEMA stated that the Central Government has recognized power as a key component of infrastructure in the Economic Survey. While the Centre has provided a number of policy and fiscal support for other sectors within this domain, such as telecommunications and housing, power has not been treated at par in terms of the Government’s fiscal and policy support.
One step in the right direction could be extending benefits under Section 80IA of the Income Tax Act in full to new power plants.
The objective of the 11th Plan is “Faster and more inclusive growth” and the while the Government is targeting a GDP growth of 10% by the end of the Plan period, it is imperative Power grows at a rate not be less than 15% a year.
Tax exemptions are available to all activities carried out in rural areas as industrial or infrastructure development in order to encourage such activities. However, the Rajiv Gandhi Gramin Vidyutikaran Yojna (RGGVY)’, a major project carried out in rural areas, does not enjoy such benefits as envisaged for the Water Supply & Sanitation Scheme or as envisaged for rural area development. If the Centre extends the tax benefits to this scheme, it will result in bringing down the cost of the scheme by up to 25%, thus electrifying more villages, opines IEEMA.
The main focus of the APDRP scheme is to reduce technical and commercial losses. But with the nominal hike in allocation of funds to the Accelerated Power Development and Reform Programme (APDRP) during the last budget, from Rs650 crore to Rs800 crore, it is difficult for the Government to achieve the target of reducing aggregate technical and commercial (AT&C) losses to 15% from the current national average of over 30%.
Keeping in view of the results acquired from this scheme, which has a very low payback period of about three years, IEEMA strongly recommends hike in budgetary allocation to APDRP to at least Rs 8,000 crore by next year.
A standard rate of central excise retained at 16% and a Secondary and Higher education cess of 1% on the aggregate of duties of excise was imposed. IEEMA advocates a single rate of excise for all products and their raw materials. Till the time a uniform GST is implemented, IEEMA proposes 8% merit rate of central excise duty on all products supplied to power generation, transmission and distribution projects.
IEEMA says the Centre should consider subsidy in interest rate as well as for capital expenditure being incurred by the electrical industry for expanding existing capacities. Such relief is already available to the Textile industry as interest subsidy of 5% and capital subsidy of 10%.
The Electrical Industry is geared up to meet 11th Plan targets of power capacity addition. However the Government has been slow in responding to the growth of the Industry, says IEEMA. The Finance Ministry should work closely with the Ministry of Power to set a realistic target of capacity addition, which should be backed up with adequate allocation of funds.