Indian Union Budget 2021-22: The Budget has envisaged significant boost to investment, with the government signalling its intent of championing a large-scale infrastructure buildout matched with ample resource augmentation.
A 34% increase in budgetary allocation towards infrastructure in the next fiscal is a move that will enhance manufacturing, generate employment, becoming a multiplier for economic growth. The relaxation in the fiscal glide path is at the centre of this strategy to enable increased government expenditure.
For the power sector, the budgetary measures support the ambitious energy transition announced by the Prime Minister, including the renewable energy target of 450 GW by 2030. The foremost focus on discom viability has been recognised as the sector’s most critical unfinished agenda.
The outcome and reform-linked financial package of more than Rs 3 lakh crore for discom infrastructure upgrade is a forward-looking plan spanning over five years. Industry looks forward to details of the nature of this package, and how it supplements other central and state schemes.
The proposal to let consumers choose their electricity supplier will unleash competition and help improve efficiency, as will the government’s intention to increase private sector participation in distribution.
Monetisation of transmission assets through the InvIT model is a promising move that will help add transmission capacity to match the rapid pace of electricity generation to meet the increase in electricity demand.
Expanding domestic manufacturing is necessary to support renewable growth, and duties on solar inverters and solar lanterns would help, provided existing projects are protected from adverse impact.