Need more energy for homes & growth - By Tulsi Tanti

March 17, 2012 - PRLog -- The financial budget — in the world’s largest democracy — will always be studied closely. A budget that meets the expectations of one billion people — with conflicting priorities — is a herculean, and perhaps impossible, task. However, and I am certain you will agree — the one need no one can deny is the need for more energy: to light up our homes and to fuel our growth.

So as the finance minister took centrestage on Thursday and spelt out the terms for the next financial year, Indians turned their attention towards their television sets (or perhaps the twitter feed!). I, too, was hanging onto every word of the budget speech.

I think we can view it as pragmatic; this year’s budget is balanced and realistic. It attempts to balance fiscal consolidation, and at the same time, counteract the slowdown of our country’s GDP growth. The power sector continues to sail on calm waters — as all major provisions for the sector remained unchanged. However, for the first time the budget accorded importance to the principles imbibed under the National Action Plan on Climate Change, by allocating resources to the missions created under the NAPCC and giving a strong mention to initiatives on renewable energy. The Government’s unwavering support to building a low carbon economy is absolutely commendable.

The allowance of ECB for the power sector is most welcome as it addresses the burgeoning energy needs of India. Along with the significant improvement in tax free bonds for infrastructure funding, the reforms pave the way to lower cost of fund, making projects more viable for investors. Increased liquidity, for putting up power projects is much needed and appreciated.

Undeniably, the most positive aspect is the extension of Section 80 IA, a very important fiscal instrument to attract investments into infrastructure projects. This obviously was a huge to all investors financing pending projects. Ideally, the extension would have been for a longer period as infrastructure projects tend to be long-term. The budget has several other elements of forward reforms such as developments on the direct tax code and goods and services tax. Further, the proposal of streamlining the dividend distribution tax on a multi layer corporate structure is, indeed, very good news for Indian corporates. We have been strong advocates of the reform.

Reduction in withholding tax also deserves a mention – it is a sizeable move downwards, from 20 per cent to five per cent.

In conclusion, this was not an historic, game-changing budget. But that was perhaps not required. For those of us in the renewable energy sector, our business progresses one step at a time – this budget is a step forward in the right direction in what remains an uncertain world.

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