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COMMENTS/ RESPONSES ON BUDGET 2014-15

11/07/2014

Ms. Sunita Narain, Director General, CSE

Many nice words, some money, but no direction for real change
 Lets look at the big budget announcements for sustainability and what they mean.
 
1. Enhanced clean energy cess on coal, increased from Rs 50 to Rs 100 per tonne. But the finance minister (FM) does not spell out what will be done with this money. Currently, roughly Rs 3,000-3,500 crore is collected in the National Clean Energy Fund, but not much is spent. The National Clean Energy Fund is important as it signals the need to make dirty coal more expensive to use. It is even more important as it is money that should be invested in renewable energy projects that meet the needs of the poorest. But this is not done. Instead, the money is frittered away in many small projects. 
 
2. Duty exemptions and other mentions of solar and renewable energy in Budget 2014 are welcome, but not enough. What the budget does not appreciate is the fact that the biggest future of solar energy in the country will be in decentralised and off-grid solutions – smaller power plants that provide clean energy to millions across India’s grid and remote villages that have electricity lines but no power. Instead, Budget 2014 falls back on the ‘big’ solar plants – announcing Rs 500 crore for ultra mega solar power plants. 
 
3. The annual fund allocation for cleaning Ganga enhanced to Rs 2,037 crore, but without recognition that the programme must be reinvented to succeed. The FM says nothing about the re-direction needed to clean the river. Even the previous UPA government had made funds available, even secured a loan of Rs 4,600 crore from the World Bank for Ganga cleaning. But all this money has not cleaned the Ganga because the approach is flawed. It focuses on building sewage treatment plants, which does not work in our poor and largely un-sewered cities. 
 
4. The recognition that climate change is real and the need to ‘adapt’ is urgent is a very important message of Budget 2014. The FM provides Rs 100 crore of national adaptation fund. While it can be argued that this is too little, it is also a fact that this is a first step to recognise the need to invest in building resilience of poor communities against climate change. The question we will have now is, what will this money be used for? 
 
5. Total sanitation is spoken about in big words, without any big idea on how to achieve this objective. The UPA II government, to its credit, had progressively increased the funding for drinking water and sanitation – going from Rs 8,000 crore in 2008-09 to Rs 15,000 crore in the February 2014 budget. But sanitation – the Nirmal Bharat Abhiyan -- still gets Rs 4,000 crore annually. This is miniscule given the scale of the challenge. So, are we to assume that NDA does not see the need for anything different in this budgetary allocation? And if so, then how does it aim to provide toilets to over 600 million people who still defecate in the open? How will it scale up this work, without additional money and effective delivery? 
 
6. Transportation is an important focus area, but Budget 2014 does not provide directions that will work. The FM sets aside Rs 100 crore for metro projects in Lucknow and Ahmedabad. But the fact is that metro systems cost anywhere between Rs 150 crore to Rs 300 crore per km to build. So, is this Rs 100 crore going to build one km or just go into feasibility studies? 
 
7. The Gujarat model is the flavor of the day in Budget 2014 but its most innovative and successful initiative to build bus rapid transit systems is ignored. There is no mention of buses – the affordable transport system for millions in cities still. Is it because it is too low-tech and old-fashioned? 
 
8. Budget 2014 puts tobacco and sugar into one category – excise duty on cigarettes, pan masala, gutkha and aerated drinks with sugar – have all been increased. It is clear that aerated drinks are the new tobacco. This is to be cheered. 
 
9. The NDA Budget is not different from UPA II when it comes to polluting vehicles. In Budget 2013, the then FM P Chidambaram had increased the tax on SUVs saying that they were inefficient and polluting. But in February, he took away the tax. Budget 2014 also believes that it must help cars that are large, inefficient and dirty.
 
Post script: Budget 2014 allocates Rs 200 crore for statue and Rs 50 crore for 50 million people who depend on the handloom sector. What does this say of priorities?
 

Mr. Tulsi Tanti, CMD, Suzlon Energy

Budget promotes manufacturing led growth, infrastructure and clean energy


· This is a growth oriented and futuristic budget.

· The big shift in policy initiatives will revive and promote manufacturing thereby paving the way for 7% growth

· Key announcements on investments in physical infrastructure development, direct allowances for new investment in Plant & Machinery, FDI, GST implementation and long term financing options are likely to boost manufacturing. Wind Energy (clean) given a top priority

· Extending of 10 yr tax holiday for power companies by 31 st March, 2017, provides much required predictability for investors investing in power projects. The target of the new government is to provide 24/7 uninterrupted power supply to all homes augurs well for the growth of energy sector in India.

· The budget proposal to increase clean energy cess from Rs.50 per ton to Rs.100 per ton for financing and promoting will indeed be a major boost for Wind energy in particular. The Clean Energy Fund will now be doubled annually from 4000 Cr

· Investment allowance along with continuation of additional depreciation (Total -60%) is also likely to benefit SMEs who would like to invest in the wind sector .

· The FM provided much awaited relief in the form of exempting special additional duty of 4% on parts and materials required for the manufacturing of wind operated generators.

· Early execution of the Green Energy Corridor Project is also likely to act as catalyst in evacuation of power from wind.

 

All these measures are likely to boost investment in the Wind energy sector which is likely to grow by 50% in 2014-15. 


Mr. Anil Chaudhry, Country President and Managing Director, Schneider Electric India

Smart city lies at the heart of the Union Budget of the new government. The allocations and the measures announced now gives shape to the Mr Narendra Modi’s initial idea of 100 smart cities. The Government has made an allocation of Rs 7060 crore - an enabling factor that will boost the planning and development of the smart cities. And to compliment it, the Government has incisively identified 7 corridors. Overall, these are very promising preamble to the realization of the smart city concept. It now needs to be seen how the details are worked out by the Government.

The budget has adequately focused on energy, in sync with the new Government’s vision, and announced various measures that will benefit in ensuring sustained growth for the sectors. The reeling power sector will find some respite, if the measures announced in the budget are implemented properly. There are measures accounted to strengthen the entire power value chain. From Rs 100 crore allocation for super critical ultra modern thermal power to the rationalization of coal linkages will facilitate the struggling power producers and put the stranded power plants on a rebound course. The Government’s promise to resolve the existing deadlocks in coal sector and provide fuel to all projects coming up before March 2015 will be a massive thrust to get the flailing sector on course to meet the Government’s 12 th Plan target of 88,000 MW.

The Budget has adequately focused on the solar energy sector. Rs 500 crore allocation for ultra-modern solar power projects will give the deserving boost to solar companies to increase generation capacity which is currently a mere 1 % of India’s total energy production. Rs 100 crore for the development of 1 MW solar parks on the banks of canals and Rs 400 crore for setting up solar power driven pump sets are some unique measures introduced that will further drive utilization of solar energy and reduce our dependency on conventional energy resources. Implementation of the Green energy Corridor Project will be a great move to integrate channels for evacuation of solar power – a formidable challenge for generating companies at the moment. The removal of customs and excise duties on solar equipment on the other hand will incentivize indigenous companies to increase domestic manufacturing and reduce reliance on import. These are most welcoming moves.”

 

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