While demand for power is expected to grow by 6 to 7 percent this year, the sector faces long-term challenges. Among the most significant are discoms not honouring high-tariff renewable power purchase agreements (PPAs); and also refraining from signing fresh thermal PPAs. The budget alone cannot address these deep-seated challenges, but we would welcome measures which will facilitate investment and growth in the power generation and, crucially, distribution sectors. Fiscal measures to encourage independent power producers to sign long-term PPAs for both renewable and thermal power would be a good step.
There is agreement that India needs to invest in infrastructure, but securing funding is challenging. The banks are turning away from infrastructure investments, and the bond market is yet to fill the void. We look forward to an enabling budget that will give investors’ confidence and make it easier for alternative investors – the insurance sector for instance – to fund infrastructure projects.
India is Asia’s second fastest growing data centre market. We need to maintain the momentum in the burgeoning data centre sector, while ensuring this growth is achieved in a sustainable manner. Encouraging energy-hungry data centre developments to concentrate on renewable energy supplies will help meet targets for greenhouse emissions, air quality, and reduced fuel imports. To facilitate this budget planners could investigate measures such as extending the Perform Achieve Trade initiative, which aims to make large industries energy efficient, to the IT industry. Any moves to build this major new industry sector on genuinely sustainable foundations are to be welcomed.
Oil & Gas
Last year the government made some welcome comments about the need for gas to play a bigger role in our energy feedstock mix. It would be good to see this supported in the Union Budget. Possible measures could include bringing natural gas within the purview of the GST; and putting liquified natural gas (LNG) imports on a par with crude oil imports by removing the 2.5 percent duty on LNG.