Sitharaman's maiden Budget dashes hopes of renewable energy developers

Bereft of any incentive or subsidy, the Union Budget for 2019-20 has come as a dampener to the renewable energy sector. The Budget's muted focus on green energy and tepid hike in allocation for the Ministry of New & Renewable Energy (MNRE) has cast doubts on the government’s target to achieve 225 Gw of renewable energy installs by 2022.

The Budget has marginally raised the allocation for MNRE to Rs 5255 crore from last year's Rs 5147 crore.

"We were expecting a quantum leap in funds for the renewable energy ministry. The government's cautious outlay means that the developers have to fall back more on private capital to bankroll their new projects”, said a green energy producer.

Though the Budget has a thrust on renewable energy, it is not complemented by enhancing the outlays for the sector.

“Schemes include green energy corridors, the ultra-mega solar power projects requires high allocation for viability gap funding to support project developers”, CARE Ratings noted in its analysis of the Union Budget 2019-20.

The budget has an outlay of Rs 9.2 billion for wind power, Rs 30 billion for solar power (both grid and off grid) and Rs five billion for the green energy corridor that aims to synchronise electricity produced from renewable sources with conventional power stations in the grid.

In her Budget speech, Union finance minister Nirmala Sitharaman said the government will use the approach of Mission LED bulb to promote the use of solar stoves and battery chargers in the country.

“To boost economic growth and the Make in India programme, the government will launch a program to invite global companies through a transparent competitive bidding process to set up mega-manufacturing plants in advanced technology areas such as semi-conductor fabrication (FAB), solar photovoltaic cells, lithium storage batteries, solar electric charging infrastructure, computer servers, and laptops. The government plans to provide them investment-linked income tax exemptions under Section 35 AD of the Income Tax Act, among other indirect tax benefits”, she added.