Mr. Prabhajit Sarkar’s views on Union Budget 2020 “In our view this is a very cogent budget, which touches upon every aspect of the electricity sector with an overall direct outlay of Rs 22000 Crores. The provisions seem to have been crafted to have a long lasting impact on the structural aspects of the sector rather than just ameliorating some immediate symptomatic issues.
Supporting power generation in the renewable sector by proposing grid integration of solarized fallow / barren lands, grid connected solar pumps as well as large scale solar power development on Railway land along rail tracks. In the thermal power space by suggesting the closure of older Thermal Power Plants which do not meet the pollution control norms, would lead to far better utilisation of newer generation capacity that otherwise is not being fully utilised.
The tax rate for new electricity generation companies has also now been brought in line with the new regime for manufacturing companies, thereby bringing the corporate tax rate to 15% and significantly expected to boost new investments in the power generation space.
In the power distribution space, the revolutionary idea of replacing all conventional meters by pre-paid smart meters would have a tectonic shift in the manner of doing business. On implementation, this would allow distribution companies to completely eliminate their payment recovery cycle from consumers, thereby leading to a positive working capital cycle and thus payments in time to the generating companies as well – resulting in a virtuous cycle of payments on time. This would also, at a later date allow for multiple supplier model to be implemented easily as the sellers of such pre-paid coupons to consumers may be allowed to source power from different avenues.
In addition to the various benefits suggested for the manufacturing sector, the digital refund of electricity duty and other central taxes and duties to exporters is also expected to support the manufacturing in the country and lead to higher electricity consumption. This again is expected to fuel the growth of the power sector in the country.
In all, we believe that the Budget 2020 has delivered on the promise of long term corrective action for the power sector in the country and is expected to revitalise the sector once again.”
