We are doing our best every day, sitting on the same spot for hours, reading as much as we can, and gaining as much knowledge as possible to become valuable and be a solution provider to the world’s problems. Why are we doing this and what do we want to achieve by being valuable? Your answer can be anything from buying yourself a Tesla or a Bentley, or a sea-facing bungalow, or making the world tour dream come true or anything else. Now imagine a scenario where you do not have enough infrastructure to charge your Tesla or secure enough fuel for your Bentley, or enough power to light up your beautiful sea-facing bungalow. You might wish to work for the welfare of the poor and underdeveloped rural regions but that is impossible without securing enough electricity to light up their homes and empower their small businesses. I hope these few lines will be enough to make us understand the direct impact of power and energy sector on our lives. Also, the growth of the economy and its global competitiveness heavily depends on the availability of reliable and quality power at competitive rates to all consumers at all places.
In the previous year, the government focused its budget allocation towards reforming the distribution networks by introducing large scale smart metering and an expansion of the National gas grid. However, the allocation of INR 22,000 crore wasn’t just enough to quench this thirst and address the proposed reforms of the country. Also, as the pandemic hit the country, the need for power suffered a huge blow. There were not enough cashflows available with the distribution companies and therefore they were not able to fulfill their obligations to the power generation companies. Therefore, this year, the government had to focus a major expenditure of INR 1,20,000 crore on increasing the liquidity to support this supply chain and was forced to compromise on the structural reforms it wanted to introduce.
The union budget of FY 2021-22 focused not only on bringing in structural reforms to step up on the ladder of development but also on providing aid to the distressed power sector. Therefore, the government allocated INR 3,06,000 crore to the distribution companies to support this important link of the entire power sector value chain. In addition to this, the Rural Electrification Corporation Ltd. will also raise about 69 % higher funds through the internal and extra-budgetary resources against what it raised previously. This is done to strengthen the sub-transmission and distribution networks in the rural areas, metering of distribution transformers/feeders/consumers in the rural area, and rural electrification.
Previously the government had discussed reducing aggregated technical and commercial losses which are currently at 26.31% (as per the Ministry of Power, Government of India) to below 15%. The present budget also has included this agenda to reduce technical losses with contemporary equipment for last-mile distribution. There is a proposal for pre-paid smart-metering which is a very expensive venture and still needs to be made clear with the kind of roll-out mechanism that will be put in place for its implementation.
As of now, we understand that in the previous year government could not contribute much to power generation companies, therefore this year a higher expenditure of INR 61,555 crore will be done, which is 22% higher than the revised estimates of the fiscal year 2021. This allocation will be made to increase the coal-based power generation capacity and build several hydroelectric power projects in Himachal Pradesh and Jammu and Kashmir. In addition to increasing power generation, this will improve the transmission and distribution infrastructure under the Integrated Power Development Scheme by the Ministry of Power. IPDS also aims at strengthening the sub-transmission network, and also be involved in metering, IT application, customer care Services, provisioning of solar panels, and the completion of the ongoing works of Restructured Accelerated Power Development and completion of the Reforms Programme (RAPDRP). The government is also determined to set up a separate central transmission utility for easing the planning and execution division of Power Grid Corporation of India Ltd.
Indian Renewable Energy Development Agency Ltd has been sanctioned INR 12,696 crore, approximately half of which is towards the development of renewable sources of energy and the rest half is towards the maintenance and expansion of the current resources. The government wants to establish a renewable energy capacity of 500 GW by 2030. It plans to install 175 GW of renewable capacity, including 100 GW of solar capacity by the year 2022. Presently we only have about 90GW of energy being produced by renewable sources and still require 85 GW to be installed to achieve this year’s target. The allocation to the solar energy corporation of India which will be funded by IEBR is set to boost the pace of the underdevelopment projects which will increase the power capacity by 32 GW using solar energy and 8 GW using wind energy.
Government expenditure in form of subsidies was seen under the KUSUM Scheme under the ministry of power and new & renewable energy. With the help of this scheme. the government is planning to update the irrigation system of India and as well as promoting solar power production by changing more than 3 crore diesel and petrol-driven pumps by solar-powered pumps. In addition to this scheme, the budget [DT1] also focused on increasing the subsidies for the development of grid-connected solar infrastructure under the solar rooftop program designed to expand access to solar savings for qualified residential customers who otherwise may not be able to use solar because of the high cost of installing panels.
The government also put yet another strong step forward for an Atmanirbhar Bharat by increasing the import duty on solar modules/cells and inverters up to 20% for 2021 from 5%. This increase in taxes is supposed to push the local manufacturing capabilities in India which in turn will reap its benefits towards increasing the solar power capacities in near future. These measures come with a backdrop to reduce India’s import dependence on Chinese products, as almost 80% of the imports of solar cells, modules, and inverters were from China.
Energy is an important input for economic development and the power sector is an indispensable part of the infrastructure in [DT2] any economy. Providing adequate and affordable electric power is essential for economic development, human welfare, and a better standard of living. The demand for power in a developing country like India is enormous and is growing steadily. Thus it is very clear that the government wishes to achieve a growth-centric, investor-friendly, and environment-conscious energy sector for the country. It is evident that the government is ambitiously putting in efforts to push towards a gas-based economy, developing infrastructure to enable cleaner use of fossil fuels and reliance on renewable sources to meet COP21 commitments as it also believes in “The nation that leads in renewable energy will be the nation that leads the world”.