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Piyush Goyal told Rajya Sabha on 6 August that while there was around `12,000 crore to `13,000 crore collected in National Clean Energy Fund (NCEF), only `500 crore came to the renewable energy sector—the balance was used for bridging the fiscal deficit. Photo: Mint
Piyush Goyal told Rajya Sabha on 6 August that while there was around `12,000 crore to `13,000 crore collected in National Clean Energy Fund (NCEF), only `500 crore came to the renewable energy sector—the balance was used for bridging the fiscal deficit. Photo: Mint

UPA diverted funds to tweak fiscal deficit

NDA govt last week said collections made in India's green energy fund announced in Union Budget of 2010-11 was used by UPA to meet fiscal deficit

New Delhi: The National Democratic Alliance (NDA) government said last week that collections made in India’s green energy fund announced in the Union Budget of 2010-11 was used to meet the government’s fiscal deficit by the previous government.

This was revealed in a detailed discussion on the working of the power ministry in Parliament last week, led by Piyush Goyal, minister in charge of power, coal, and new and renewable energy.

Goyal told the Rajya Sabha on 6 August that while there was around 12,000 crore to 13,000 crore collected in the National Clean Energy Fund (NCEF), only 500 crore came to the renewable energy sector—the balance was used for bridging the fiscal deficit.

The fiscal deficit was narrowed to 4.6% of gross domestic product in the year ended 31 March from 4.9% of GDP in the previous financial year.

In the year to 31 March, finance minister Arun Jaitley has stuck to the 4.1% of GDP fiscal deficit target set by his predecessor P. Chidambaram in the February interim budget.

Mint reported on 22 July that money collected through NCEF, which was expected to promote and fund clean energy projects, was used to meet the government’s budget shortfall by the United Progressive Alliance.

In the first three months of this year ending 31 March, fiscal deficit was 2.97 trillion, against the full-year target of 5.31 trillion.

Interestingly, the Comptroller and Auditor General of India (CAG) had raised red flags on the handling of NCEF accounts by the government in its report on central government’s accounts for financial year 2012. The CAG in its report said that while 3,646.01 crore ( 1066.46 crore in 2010-11 and 2,579.55 crore in 2012-13) was collected through clean energy cess, only 1,066.46 crore was transferred to NCEF.

While the government replied that the transfer was made to the public account as per the budget provision, CAG in its report said, “The reply is in contravention of the prescribed accounting procedure, which stipulates that in addition to the maintenance of the proforma account by the ministry of finance, the entire cess levied would be transferred to the Fund so that the same could be effectively monitored through Finance Accounts."

NCEF involved levying a clean energy cess of 50 per tonne on coal mined in India or imported. The cess, which came into effect in July 2010 and was collected by the Central Board of Excise and Customs (CBEC), has been doubled in this year’s Union Budget to 100 per tonne. NCEF has been managed by the department of expenditure under the finance ministry.

In another development which may have huge political ramifications, Goyal informed Parliament that the government was willing to change the way electricity is allocated to states, moving away from the current formula which some say is skewed towards large, rich states.

Goyal said that the Gadgil formula was conceived in the fourth five-year plan period; with the 12th five-year plan period on, there was a need to review the issue. He added that he was advised not to touch the issue, as “it will be opening up a Pandora’s box".

Goyal, however, went on to add that if the states are of the opinion that the issue should be revisited without any differences, he was ready to have a rethink on the issue.

Mint reported on 7 July that the NDA government may change the way electricity is allocated to states.

The current formula is built around the central plan assistance or the money provided by the central government for the states to fund the five-year plans and the previous electricity consumption pattern.

This formula which may be revisited now was evolved in late 1970s, in case of thermal and nuclear power stations, and early 1980s, in case of hydel power stations.

The current criteria have caused friction between states and have in recent weeks become another bone of contention between the warring Andhra Pradesh and Telangana.

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