Jaitley gives more power to rural India

Written by fe Bureau | Updated: Jul 11 2014, 18:02pm hrs
Arun JaitleyFinance minister Arun Jaitley allocated Rs 500 crore to a new scheme called Deen Dayal Upadhyaya Gram Jyoti Yojana. (PTI)
One of the biggest beneficiaries of the 2014-15 Budget has been the power sector, which has seen a slew of allocations aimed at boosting power generation and making it more efficient.

Finance minister Arun Jaitley allocated Rs 500 crore to a new scheme called Deen Dayal Upadhyaya Gram Jyoti Yojana, which will separate the transmission lines that feed electricity feeder to agricultural and non-agricultural users to ensure uninterrupted power supply to rural areas.

Debasish Mishra, senior director with consulting firm Deloitte Touche Tohmatsu said that this feeder separation concept was initiated in Gujarat and it helped domestic consumers who were earlier part of the same feeder line. Also, non-agricultural consumers were deprived of power for long as agricultural users were allocated eight to nine hours of power a day.

The separation of feeder lines helps in reduction of transmission and distribution losses and ensures better supply of electricity. But the allocation seems too little to make any real impact, Mishra said.

Jaitley also said it will ensure coal supply to power plants which are already commissioned or would be ready by March 2015 to unlock dead investments.

Mishra of Deloitte estimates that there is nearly 30,000 MW of generation capacity in India that has not received coal linkage, entailing an investment of around R150,000 crore. However, this proposal seems to be a daunting task, he added.

Power utility firms that are ready to begin operations by March 2017 will also be eligible for the 10-year tax holiday extended to such existing companies, according to a provision of the Budget.

Power plants have long gestation periods and the extending 10-year tax holiday will help achieve Indias capacity generation targets... But a lot more still needs to be done to make existing imported coal-based plants viable, Tata Power said in a statement.

Renewable energy received a much-needed shot in the arm in the Budget. The sector has historically faced issues such as high cost of generation and poor infrastructure for evacuation of generated power.

Taxes were reduced or waived on a range of components used for making solar or wind-operated generators.

Encouraging large-scale power projects as well as solar power generation through fiscal incentives will help boost adoption, revive investor confidence, and increase capacity, Tata Power said.

The Budget also proposed setting up ultra-mega solar power projects in Rajasthan, Gujarat, Tamil Nadu, and Jammu & Kashmir, with a budgetary allocation of R500 crore.

The government is also launching a R400-crore scheme to finance solar-power-driven agricultural pump sets and water pumping stations.

Mishra said that doubling the rate of clean energy cess levied on coal production to R100 per tonne and the hike in rail freights announced earlier will impact power tariff by 14-15 paise per unit.

Tulsi Tanti, chairman and managing director of renewable energy power firm Suzlon, said the increase in clean energy cess will double the clean energy fund (used for promoting renewable power) to around R8,000 crore, which will benefit companies engaged in this sector.