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Polite noises

According to reports, general budget presented by the Union Finance Minister has many positives for renewable energy sector, particularly for solar photovoltaic, wind, and biomass fields. While a total sum of ₹1,000 crore has been proposed for solar energy projects, a slew of fiscal benefits are accorded to wind and biogas.

While these certainly are welcome steps, what is lacking is a ‘vision’ about Indian renewable energy sector. This is especially disappointing after the Prime Minister’s declaration of making India a global force.

From that perspective, absence of substantial budgetary allocations for indigenous R&D in renewable energy is inexplicable. Just for comparison, estimated budget for R&D in the atomic energy at ₹3,430 crore is close to the total budget for Ministry of New and Renewable Energy, which is estimated to be ₹3,941 crore.

Likewise, the budget proposes piece-meal measures such as reduction in custom duties. However, a holistic push to make India a ‘renewable energy manufacturing hub’ is missing.

In this era of global competition, only way the domestic industry could grow is by remaining competitive in every which way. Protection measures like anti-dumping duties, at best are, Band-Aid solutions only.

Instead technology collaboration, upgradation, and economies of scale are the need of the day. It was expected, therefore, that the budget would propose specific schemes and impetus for the renewable energy manufacturing industry.

Even budgetary allocations for solar energy indicate some sort of tokenism. For instance, ₹500 crore has been allocated for Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Laddakh. Earlier, for such a project at Sambar Lake in Rajasthan, it was estimated that ₹7,500 crore would be required to set up 1000 MW capacity in the first phase.

Sure, lots of this would come as private investments, but infrastructure development for solar parks of this scale itself would entail an investment of substantially higher level.

Considering that financing of renewable energy projects, especially for the smaller projects, has been one of the key impediments to accelerated uptake of renewable energy in the country, a dedicated fund on the lines of ₹10,000 crore fund for MSMEs for providing equity, quasi equity, soft loans and other risk capital would have gone a long way in addressing this important issue.

While the Clean Energy Cess on coal is proposed to increase from ₹50 per tonne to ₹100 per tonne, expanding the scope of National Clean Energy Fund (NCEF) to ‘financing and promoting clean environment initiatives’ and funding research in the area of clean environment would have wider implications.

NCEF has hardly supported any research project in the field of clean energy. With financing of projects also becoming its mandate, it would be used more as an extra-budgetary source for meeting routine requirements.

Moreover, mandating NCEF to promote clean ‘environment initiatives’ would make it more of a generic fund, thereby deviating widely from its originally envisaged focus on clean ‘energy’ innovations.

It would also be useful if other initiatives such as National Rural Livelihood Mission, Deendayal Upadhyaya Gram Jyoti Yojana and Rural Infrastructure Development Fund are designed in more integrated fashion, making renewable energy one of their central architectural elements.

The writer is on the faculty of Teri University

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