According to reports, in the Union Budget for 2017-18, Finance Minister Arun Jaitley allocated Rs 5,472.84 crore for the Ministry of New and Renewable Energy (MNRE), which is an increase of 25 percent from FY17 revised estimates. Last fiscal year the MNRE was allocated Rs 5,036 crore, an enormous jump of 1822 percent from FY16 revised estimates of Rs 262 crore.
In the Budget speech Jaitley said that in solar energy, the government proposes to take up the second phase of Solar Park development for additional 20,000 MW capacity. The amount of capital allocated is revised keeping in line with the Government of India’s target of achieving total renewable capacity of 175 GW by the end of 2022. This includes 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power.
Jasmeet Khurana, Associate Director – Consulting, Bridge to India told Moneycontrol:”It was the things that were not announced in the budget speech that will have a larger impact on the solar sector than the things that were announced. Discontinuation of the tax holiday benefit is expected to have some negative impact on the sector but the cost reduction benefits through last year should help counter this negative impact.” “This showcases the inherent strength of the sector and illustrates the fact the industry can grow despite government interventions being reduced or removed,” he said. “Having said that, there is now little room left for the industry to also absorb a rate increase due to Goods and Services Tax (GST) within a short duration of time. We hope that the Ministry of Finance accepts the Ministry of Power’s recommendation on zero-rate tax status for the sector under GST,” he further added.
“Budget further lends execution focus to the commitments made by the Government towards having a more sustainable growth from an environment standpoint,” Manish Aggarwal, Head of Energy and Natural Resources, KPMG said.
Last year on the occasion of Mahatma Gandhi’s birth anniversary, Prime Minister Narendra Modi’s Cabinet gave a green ligh to ratify the Paris climate change agreement. Under this agreement all participating nations are required to help reduce emissions to limit the global temperature rise to well below 2C. India already has committed that by 2030, at least 40 percent of its electricity will be generated from non-fossil sources. Having set one of the boldest renewable energy targets in the world, the country is bound to become a major player in the solar and wind energy market. On the back of this expenditure push and various tax exemptions, India’s solar sector in particular had a bountiful 2016, where most key indicators grew 2-3 times.
The country added total solar capacity of 4.9 GW (estimated), an increase of 101 percent over 2015 and crossed the 10 GW cumulative installed capacity mark. In 2016, India’s rooftop solar segment also crossed the 1 GW mark in September, growing by 135 percent over last year.