‘Faith is the bird that feels the light when the dawn is still dark.’
Is the Faith in Renewable Hopeful with Budget 2021-22?
With a lot of Hope to look further in 2021 and leave behind the 2020 blues, FM Sitharam proposed the Budget 2021-22. The BSE & NSE boosts portrayed the happiness of the investors and the acceptance of the proposed budget.
Here is a quick overview of the Budget fueling growth in the Energy Sector of India with focus on renewables.
Government has massively funded DISCOMs to uplift their loss-making status and upgrade the entire eco-system.
The government has dropped proposal on direct benefit transfer (DBT) of subsidy to electricity consumers and instead would first de-license the Electricity Distribution.
The consumers can select their own distribution company. However, it will not disrupt the existing licenses.
This move is intended to induce competition in electricity distribution and empower consumers to switch networks but will not disrupt the existing licenses.
In all, it will also induce fair competition and address monopoly concerns.
It will also assist DISCOMs for infrastructure creation tied to financial improvements, including prepaid smart metering, feeder separation, and up-gradation of systems.
PLI stands for Production Linked Incentive Scheme that is devised to enhance the AtmaNirbhar Bharat drive.
The motto is to promote the growth of manufacturing industries to become an integral part of the global supply chain.
The government has committed Rs.1.97 lakh crores in 13 sectors and the PLI is launched to create the manufacturing global champions.
The energy sector has been dedicated with 24%, Rs.4,500 crores for ‘High Efficiency Solar PV Modules’ which will be implemented by MNRE (Ministry of New & Renewable Energy).
Considering the current scenario of solar industry, the domestic manufacturing industry has limited annual capacity of around 2,500 MW for solar PV cells and about 10,000 MW for solar PV modules.
The manufacturing too moreover depends upon imported solar PV cells, PV modules and other raw materials.
Thus, the scheme is proposed to boost the domestic manufacturing needs and further create demand for locally produced balance of raw materials like EVA, Solar Glass, Backsheet, Junction Box, etc. to augment the entire Solar Manufacturing Eco-system.
The custom duties are increased to combat the imports and promote the domestic manufacturing focusing on the AtmaNirbhar Bharat mission.
This did not meet the expectations of more elaborate support for RE industry and especially solar industry.
The budget has Additional capital infusion of:
As part of Intended Nationally Determined Contributions (INDC), India targets to reduce carbon emissions intensity of its GD by 33-35% as against 2005 level.
It targets to install at least 40% of its electricity generation capacity through non-fossil sources by 2030.
The budget infusion would help the SECI & IREDA’s – the apex bodies for Indian renewables in contributing initiatives to fulfill the set ambitious targets.
Capital infusion will also enable SECI to set up innovative projects of with an investment of around Rs.17,000 Cr.
The International lenders are happy to channelize their funds to India’s large RE market through IREDA. Thus, it will enable IREDA attract and keep intact with the foreign investors.
Only 3 times in the past the budget has followed a contraction in Indian economy. This time it’s because of a global pandemic like in other countries. The government is fully prepared to support and facilitate the economic reset.
Budget 2021 has focused on growth, investment and jobs. The renewable sector, especially solar manufacturing and related services has got the keen eye from investment prospect which will help to create jobs.
The reviews of all the investors and solar industry delegators reassure that the faith for better recovery of the declined repo rate is up and high.