India’s new finance minister has presented a budget that pushes renewable energy in a big way, though solar energy has taken all the allocations. Environmentalists think the amount is not nearly enough

Finance Minister Arun Jaitley (Left) gives a push to solar energy while presenting his maiden budget in parliament. (Image by Press Information Bureau, Government of India)

Finance Minister Arun Jaitley (left) gives a push to solar energy while presenting his maiden budget in parliament. (Image by Press Information Bureau, Government of India)

With an overall allocation of Rs 1,000 crore ($166 million) for renewable energy schemes – all in the area of solar energy – India’s new Finance Minister Arun Jaitley has given a push to the sector while presenting his maiden budget in parliament on July 10.

Half this amount has been earmarked for new solar projects in Rajasthan, Tamil Nadu and the Ladakh region of Jammu and Kashmir; Rs 400 crore go for development and marketing of solar-powered irrigation pumps; and Rs 100 crore for solar panels along or atop irrigation canals.

Much of this money is expected to come from a doubling of the cess on coal for the clean energy fund, from Rs 50 to Rs 100 per ton.

Apart from this, anyone generating power through solar energy can take advantage of the ten-year tax holiday announced by Jaitley for all power production units set up before March 31, 2017. At the retail level, there is a reduction in the sales tax on solar panels.

Reacting to the budget proposals, Bittu Sahgal, a noted environmentalist and editor of Sanctuary Asia, said, “The tiny amount for solar power is not even a drop in the ocean. Our heating, lighting and pumping needs in off-grid locations should have relied on wind-solar-biogas hybrids. The budget allocation for this investment should have been closer to Rs. 30 to 40 thousand crores to meet virtually all our off-grid lighting, heating and water pumping needs.”

Chandra Bhushan of the think tank Centre for Science and Environment said, “This is a very disjointed programme on renewable energy. This programme is no different than the programme promoted by the last government. It was a disjointed programme too. The finance minister hasn’t put enough money on the table. There is an opportunity but the problem with the budget is that it treats energy and green energy differently. Green energy is different, Graamin Urja Yojna is different, then there is separate allocation for ultra-mega solar power projects, separate for solar powered water pumps. All of this should be brought together into a single coherent programme – an energy access plan based on renewable energy.”

Tobias F Engelmeier of the think tank Bridge to India – which is dedicated to promoting solar energy in the country – had said before the budget that any scheme announced by the finance minister to promote renewable energy “should help revive the subsidy scheme for rooftop solar projects.” He had also said that the tax holiday would be effective only if the 19% Minimum Alternate Tax was also waived.

On June 26, a few days before the budget was presented, the Ministry of New and Renewable Energy announced continuation of the capital subsidy scheme for rooftop solar projects. The government will continue to provide 30% of the capital cost of the projects implemented by its “channel partners”, state nodal agencies or other official agencies such as railways, defence, public sector units and municipal corporations. The maximum size of a project that can get the subsidy

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