Look Back with Skepticism – Renewable Energy

As the Modi government is gearing up for Budget 2016, we decided to take a look back at Budget 2015’s allocations for the renewable energy sector.

The Indian government had announced $400 Million for renewable energy expansion and adaptation to climate change in Budget 2015. This money was supposed to be used in building grid-connected and distributed renewable energy projects.

Around $12.5 million was allocated to boost production of electric and hybrid vehicles. Tax concessions were offered on the import of components used in the manufacturing of such vehicles. This was seen as a significant step to tackle the country’s growing air pollution issue.

The government also doubled tax on every metric ton of coal imported or produced. This tax doubled for the second consecutive time. It’s now over $3.3 per Metric Ton. However, the allocation to the National Clean Energy Fund (NCEF) remained the same at $780 million. The revenue collected from tax on coal imports and production was announced to be used to finance renewable energy projects.

The government also announced lower tax rates for manufacturing solar power components.

In the last financial year that will end in March 2016, the renewable energy target was 4,460 MW, a 24% hike over FY2014-15.

India’s Prime Minister Narendra Modi might have promised 175 Gigawatts of renewable energy by 2022. Of this target capacity, 100 GW is planned to be Solar power, 60 GW Wind power, 10 GW from Bio-mass and 5 GW from Hydro-electric power. However, the Central government's budget allocation for solar energy for the current financial year is merely 0.45% of the required investment.

Let’s hope Arun Jaitley makes some serious reforms to ensure India meets its ambitious target.