Mr. Shirish Garud Director and Senior Fellow Energy and Environment Technology Development Division
This Budget has laid down the roadmap for taking India to the next level of growth. We not only see a clear direction in which the economy is going to be steered but also the key milestones that we need to cross on the way. Hon Finance Minister Shri Arun Jaitley has identified 9 pillars for having a transforming impact on the economy and life of people which were – Agriculture, Rural Sector, Social Sector (healthcare), Education, Infrastructure, Financial Sector, Governance and Ease of Business, Fiscal Discipline, Tax Reform. The Budget was presented in the backdrop of an improving rural sector and infrastructure expansion; which were two of the prominent features of the Finance Minister’s Budget speech.
Key Highlights of the Union Budget 2016-17 for energy and environment sector
The Budget focuses on resource mobilization for agriculture, rural economy and clean environment. Some significant features are: To augment infrastructure spending, Government will permit mobilisation of additional finances to the extent of Rs 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority through Bonds during 2016-17. This can further be utilized for development of renewable energy projects by REC, IREDA, PFC. It has been proposed to achieve 100% village electrification by 1st May, 2018. This is a boost for rural sector and clean energy resources can be utilized in order to achieve this ambitious target. The Clean Energy Cess has been renamed as “Clean Environment Cess” and it has been increased from INR 200 per tonne to INR 400 per tonne of coal. It would further include an umbrella of projects under the fund and would provide a significant boost to the research and development and other clean energy development activities. As a part of the tax proposals, Government announced Accelerated Depreciation to be limited to maximum of 40% from April 1, 2017, which currently is 80 % in the first year. This might impact the profitability of renewable energy projects which are dependent on Accelerated Depreciation as a tax saving instrument. It might hinder the growth of renewable energy. It has been proposed that there would be exemption of service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship. This would help in bring down
the cost of skill development services. Similarly, service tax on rural electrification has also been removed. It has been announced that new manufacturing companies incorporated on or after 1.3.2016 are to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation. This will bolster the growth of PV manufacturing companies in the country, thus promoting the growth of indigenous solar manufacturers.
