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Government discontinues subsidy scheme for green energy

According to reports, the Narendra Modi government may be quite vocal when it comes to its commitment towards clean energy, but when reality bites, it is seen as taking a back seat. The tight finances have forced the government to silently discontinue one of its key subsidy schemes promoting renewable energy.

The share of solar power within the renewable energy space was 8% in FY14 and experts feel that the withdrawal of the subsidy may hamper the desired growth in

capacity addition in FY16. The scheme was discontinued with effect from March 1.

The Ministry of New and Renewable Energy (MNRE) wanted commercial banks to stop giving loans for installing solar home lighting system under the subsidy scheme since it is burdened with pending subsidy claims. This bank loan cum capital subsidy scheme was part of the Jawaharlal Nehru National Solar Mission (JNNSM). “It’s a temporary withdrawal till the clearing of the pending subsidy,” a senior official of ministry told ET. “The finance department has not released the fund,” he said. ET has learnt that the size of pending claims is Rs 130 crore, which is just about 5% of the annual plan of Rs 2,500 crore to promote renewable energy.

“The Ministry is in the process to clear dues for the loan already extended by the banks,” the ministry said in a note to National Bank for Agriculture and Rural Development and advised it to instruct banks to stop lending till further notice.

“JNNSM Phase aims to give a major thrust to off-grid solar power in areas where grid has not reached and many parts of the country where electricity supply situation is very poor. If this news is true, it would be negating this objective,” said Debasish Mishra, senior director with Deloitte Touche Tohmatsu India Pvt. Ltd.

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