OPINION: Budget 2021 expectations for the power sector

Sustained economic growth continues to drive electricity demand in India and the government of India’s focus on attaining ‘Power for all’ has aided capacity addition in the country. At the same time, the sector is facing extraordinary challenges at all levels, on the supply side — fuel, logistics, finances, and labor; regulatory — environment and land acquisition. And financial — payment challenges, lack of liquidity of promoters, and financing risks- banks sitting on massive power sector non-performing assets.

Nirmala Sitharaman, the Finance Minister, while presenting the Union Budget for 2020-21 in February 2020, had stressed on reforming the distribution network and introducing large-scale smart-metering. She had also proposed an expansion of the national gas grid. However, in the end the 2020 Budget ended up allocating only Rs 22,000 crore towards the power and renewables sector, which was entirely inadequate to address the size of the reforms proposed.

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