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The 2008-09 Budget Gives Renewable Energy Sector a Pass!

The 2008-09 Budget is as expected – for the masses. This “typical election year Budget” gives renewable energy sector a pass. Finance Minister’s (FM’s) announcements that may “obliquely” however influence the renewable energy sector and climate change arena include:

Marginally more outlay for renewable energy-based infrastructure projects. FM has proposed to raise the corpus of Rural Infrastructure Development Fund-XIV in 2008-09 to Rs 140 billion. The Government has also approved the continuation of the Rajiv Gandhi Grameen Vidyutikaran Yojana during the Eleventh Plan period with a capital subsidy of Rs 280 billion. The FM has proposed to allocate Rs 55 billion in 2008-09 for the Yojana.

Focused institutional mechanism to promote clean technologies. FM hints at a "common but differentiated responsibility" to promote clean technology products, review fuel emission and efficiency regulations, replace wood by solar as the fuel of common use, encourage use of gas which is the most benign hydrocarbon, set up a trading platform for carbon emissions, and build sustainable greenfield cities.

“More efforts” towards evaluation of the climate change impact. According to the FM, work is in progress to appoint an expert committee to study the impact of climate change on India and identify measures that the Government may have to take in the future ( this was incidentally promised in the last Budget Speech as well!)

Possible impact in customs duty on some project imports. More clarity is needed on this announcement as the FM has proposed to reduce the customs duty on project imports from 7.5 per cent to 5 per cent, while also proposing to impose a 4 per cent special CVD on a few specified projects in the power sector.

All in all, nothing to celebrate for the renewable energy sector…

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