India’s Union Budget 2018 – My take.

The budget is clearly focused on reinventing a New India, with specific measures announced for strengthening the rural and agricultural economy in addition to infrastructure development. It is aligned to the objective of overall economic growth, Nation building and job creation. This budget, takes into account various stakeholders across the spectrum, right from the social sector, businesses, young India and the senior citizens.

The budget has given significant impetus to MSME’s who are the backbone for the wind energy sector of India, as they manufacture components and provide various services. Reduction of corporate tax for MSME’s will help them to reinvest the surplus capital in establishing newer units to meet the overall target of 175 GW renewables by 2022. Also, government’s initiative to recapitalize PSU banks, enables the banks to provide loans to MSME’s.

However, I am hopeful the finance minister will consider the following to enable Nation’s Energy Security, sustainable and affordable power for all:

  • Reinstate Accelerated Depreciation to the tune of 80% to small domestic investors with project size less than 25 MW, till at least FY2022 to enable the 175 GW renewable energy target. This will also benefit Central Public Sector Enterprises (CPSEs) and will also give impetus to the government’s Make in India vision
  • Provide 50 paise/kWh as incentive to Performance Based Incentive (PBI) to state DISCOMs for procuring renewable energy based on FiT for small projects of 25 MW
  • Export incentive to achieve manufacturing target of 10,000 MW+ per annum, by increasing export incentive from 2% to 5% , to make Indian exports competitive in the global market

Overall the measures on the economic reforms, ease of doing business and impetus for the social sector are steps in the right direction for the growth of Indian economy in the long-term.