Budget Impetus for power sector

The schemes announced in the Union Budget 2020 are all set to provide the much-needed thrust to the power sector.

Indian power sector is poised for huge growth over the next decade as the government plans to eliminate the biggest sectoral problem i.e. poor financial health of distribution companies (DISCOMs) by introducing effective mechanisms.

Further, the schemes announced in the Union Budget 2020 are all set to provide the much-needed thrust to the power sector. Finance Minister Nirmala Sitharaman proposed an outlay of Rs 22,000 crore for the power and renewable sector in 2020-21 for realising its goal of 24X7 electricity for all. Also, the proposed conversion of conventional electricity meters into prepaid smart meters in next three years will prove to be a positive step in addressing the financial stress of DISCOMs.

Placing India back on the growth trajectory toward a $5 trillion economy, it is mandatory to step up infrastructure investments. In this aspect, the announcement of allowing 100 per cent tax exemptions for sovereign wealth funds (SWFs) for investments in infrastructure projects, is being considered as the ‘biggest takeaway’ of the Union Budget 2020.

Also, on the infrastructure front, when it comes to the power sector, the tax rate for new electricity generation companies has now been brought in line with the new regime for manufacturing companies, thereby, bringing the corporate tax rate to 15 per cent. This is expected to boost new investments in the power generation space significantly.

The Budget has announced a budgetary allocation of Rs 2,516 crore for the solar power sector, a 10.35 per cent increase over Rs 2,280 crore provided in the Revised Estimate for 2019-20. Also, the Pradhan Mantri Kisan Urja Suraksha Utthan Mahabhiyan (PM KUSUM) Scheme has been expanded under which 20 lakh farmers would be provided funds to set up standalone solar pumps.This will provide demand boost to solar equipment and energy efficient pump manufacturers.

In all, industry experts believe that the Budget 2020 has delivered on the promise of long-term corrective action for the power sector in the country and is expected to revitalise the sector once again.
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