Home >Budget 2019 >News >Budget ignores renewable sector for the third-time running

Budget ignores renewable sector for the third-time running

  • The only large infrastructure segment to benefit at all from the interim budget is power distribution
  • Total allocations to the distribution segment rose 8.5% year-on-year to Rs. 12,021 crore

NEW DELHI : Despite Piyush Goyal’s grandstanding on renewable energy during his Budget speech, actual allocations for the sector are lower in the year ahead.

While the revised estimates for FY18-19 show that the government spent a combined 3340 crore on wind and solar energy sectors and green energy corridors, the allocation for the same falls to 3310 crore in FY19-20. The wind sector, particularly, has fallen out of favour, taking a 24% hit in allocations.

This is far from Goyal’s statement on the floor of the House where he said that “India provided leadership to the global effort to address the problem of climate change. Our commitment to promote renewable energy is reflected in setting up the International Solar Alliance."

In fact, the only large infrastructure segment to benefit at all from the interim budget is power distribution, keeping in line with the Modi government’s promise to bring power to all through the Deen Dayal Upadhyaya Gram Jyoti Yojna and the Integrated Power Development Scheme (IPDS). Total allocations to the distribution segment rose 8.5% year-on-year to 12,021 crore.

“What the government is saying and what the government is doing are completely different things when it comes to renewable power," Shashi Shekhar, Vice-Chairman at solar developer ACME, told Mint. “Every investor needs certainty in the industry but with renewable energy, changes come at the drop of a hat.

Unless you create a good environment, how do you expect the country to achieve its renewable energy targets? The government has set mega targets (227 GW of renewable power by March 2022) but the government is not playing any facilitative role – in terms of policy or taxation stability, access to financial institutions - beyond this.

“Unfortunately, this government does not see renewables as mainstream power source. So for the renewables sector, this is a disappointing budget," Shekhar added.

In fact, this is the third consecutive year under the Modi government that renewables have received short shrift. In the budgets of both 2017-18 and 2018-19, the renewables sector was left disappointed and the government failed to offer any subsidies or incentives to the sector.

Sumant Sinha, Chairman and Managing Director of ReNew Power Ltd, had said before the budget that the government should focus its energy on providing tax reliefs for renewable companies so as to increase their investment appetites, rationalise GST rates on key inputs for the sector and bring in a special financial package to encourage rooftop solar installations. None of those have been touched upon.

Girishkumar Kadam, sector lead for power and renewables, ICRA, said: “The government’s focus is on rural electrification and it wants to control losses for utilities, hence boosting support under IPDS. With rural electrification, the programme has been one for 2-3 years and the government wants to complete 100% by March 2019. For renewables, the only significant increase in allocation is for building green energy corridors – which is setting up transmission infrastructure strictly for evacuation of renewable power.

The programme was launched 3 years ago but work is progressing at a slow rate. But besides this, renewables needs allocation for newer technologies such as battery storage, offshore wind projects, floating solar etc and the budget has given no direction for any of this."

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