The budget rightly focussed on providing boost to economic growth by providing a 33% increase in capital expenditure budget to Rs 10 lakh crore. This will facilitate and channelise private sector investments into the key infrastructure sectors.
India has set ambitious renewable energy (RE) target and net zero goal by 2070. The RE industry had huge expectation, however, the sector continues to face headwinds in the form of high duties and availability of concessional finance.
The big question arise how the high capital allocation to Ministry of Petroleum and Natural Gas (MoPNG) is towards energy transition and net zero objectives? Is the government signaling in developing more strategic gas reserves or gas infrastructure development or helping OMCs tie up with the loss on account of high oil and gas prices? This fine print of allocation to MoPNG needs a better understanding.
Further, there has been capital outlay to railways of Rs 2.40 lakh crore, highest ever outlay which is about 9 times the outlay made in 2013-14. Again, the big question is whether it is for passenger traffic or building freight corridor for transportation of coal? Government also recently announced no retiring of coal plants till 2030 which will extend the life of inefficient plants beyond its useful life and lower plant load factor of all its existing coal fleet.
On the positive side, government announced inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh with central support of Rs8300 crore; Viability Gap Funding for 4GWh of battery energy storage system (BESS); Rs19700 crore under the Green Hydrogen Mission and a Green Credit Programme.
To promote green mobility, government announced providing funds for replacing old polluting vehicles; decrease in custom duty on import of capital goods for li-ion batteries; increase in budget for the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme from budgeted estimate of Rs2900 crore in FY2022/23 to Rs5172 crore in FY2023/24. While there is some reason to cheer with increase in capital expenditure that will boost economic growth, however it is necessary that growth is backed by sustainable energy choices.
It was expected government will reduce duties on imports of modules and cells till the time domestic manufacturing picks up as offtakers of renewable energy power mainly by discoms have no appetite for increased prices. Further, it was expected reduction in duties for electrolysers, more allocation under the PLI scheme for batteries and electrolysers, reduction in GST rates, creation of stabilisation fund for carbon market etc, which again is missing in the current budget.
There needs to be further push to be given on demand side by creating demand side obligation for sector like steel, cement etc. and bring in more energy conservation measures.
This budget is a mixed bag. While there is some reason to cheer but under ‘LIFE’, there was a hope that this will bring more sops to develop renewable energy ecosystem.
