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Green corpus without a cause?

According to reports, India’s green energy fund, which currently has around Rs.12,000 crore in the bank, runs the risk of becoming another corpus without a cause, unless the National Democratic Alliance (NDA) government reviews the way the money collected since July 2010 has been put to use. Only an insignificant portion of the National Clean Energy Fund (NCEF), which was expected to promote and fund clean energy projects, has been disbursed, according to a government official with knowledge of the matter, and much of it has been used to meet the government’s budget shortfall. “Of around Rs.12,000 crore collected (till date) in NCEF, only Rs.500 crore has been disbursed for funding clean energy technologies.

This is even as projects totalling Rs.10,000 crore have been approved. We have been raising this issue for some time. The fund has been used to meet budgetary shortfalls,” this person said on condition of anonymity. NCEF was announced in the Union Budget of 2010-11. It involved levying a clean energy cess of Rs.50 per tonne on every tonne of coal mined in India or imported. The cess, which came into effect in July 2010 and was collected by the Central Board of Excise and Customs (CBEC), has been doubled in this year’s Union Budget to Rs.100 per tonne. NCEF has been managed by the department of expenditure under India’s finance ministry. “The fund’s collection has been used to tame the fiscal deficit. While the cess collection is shown as a separate head, that money has been used to contain the fiscal deficit. There has been minimal disbursal,” added a second person, who is aware of the functioning of NCEF.

The fiscal deficit was cut to 4.6% of gross domestic product (GDP) in the year ended 31 March from 4.9% of GDP in the previous financial year. In the year ending next March, finance minister Arun Jaitley has stuck to the 4.1% of GDP fiscal deficit target set by his predecessor P. Chidambaram in the February interim budget. “Resource mobilization in 2014-15 on the non-tax side has been the result of measures taken by the government of unlocking locked up resources,” the fiscal policy strategic statement of the finance ministry said.

“Government through legislation and executive decisions had created balances under various earmarked funds after seeking Parliamentary appropriation for specific purposes.” The statement added: “An analysis of the balances under theses earmarked funds revealed that there are significant balances lying under such funds, which are not being used for financing welfare and development activities of the government. It was accordingly decided that amounts lying unutilized in the fund shall be used for the purpose for which they were earmarked in the first instance.” Some Rs.12,252 crore lying unused in various funds such as NCEF, the Central Road Fund, the Prarambhik Shiksha Kosh, the Social and Infrastructure Development Fund and the Guarantee Redemption Fund has been “redeployed in the budget for financing activities spelt out in the respective legislation or government decision”.

Queries emailed to a finance ministry spokesperson on Wednesday remained unanswered at the time of going to press. A spokesperson for the ministry of new and renewable energy asked Mint to contact the secretary for the ministry; no response had been received from the secretary’s office till press time to an email sent by Mint on Wednesday.

A senior cabinet minister, who also didn’t want to be identified, said: “When we were in the opposition, we weren’t aware about the financial jugglery involved. Now we realize how the fund was used. This government will use the fund for what it is intended for.” India has a power generation capacity of 248,510 megawatts (MW), of which only 13%, or 31,692.14MW, is contributed by renewable sources.

The National Action Plan on Climate Change recommends that the country generate 10% of its power from solar, wind, hydropower and other renewable sources by 2015, and 15% by 2020. Developing renewable energy will also help reduce dependence on coal, which is in short supply domestically, requiring imports of the mineral to fuel most of India’s power plants.

The Bharatiya Janata Party, which leads the new government, made energy security a part of its poll plank. India, which is dependent on imports to meet its energy demand, has an energy import bill of around $150 billion. This is expected to reach $300 billion by 2030, requiring a $3.6 trillion payout by 2030. In the budget, finance minister Jaitley expanded the scope of NCEF’s use to include financing and promoting clean environment initiatives and funding research in the area of clean environment. The doubling of the cess will result in an increase in electricity tariffs and a collection of about Rs.6,000 crore every year. This year’s budget unveiled a detailed road map for harnessing India’s renewable energy resources. The strategy, aimed at contributing to India’s energy security, includes schemes such as setting up so-called ultra-mega solar power projects, developing solar parks on canal banks, constructing transmission corridors for renewable energy and energizing 100,000 solar power-driven agricultural pump sets and water-pumping stations. To encourage the setting up of clean energy projects, the budget also provided excise duty exemptions for raw materials for solar and wind power projects.

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