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The following was what I wrote for our newsletter yesterday. Thought it could be useful to those who have not subscribed to the EAI Newsletter, so am reproducing it.

“What happened recently in New Delhi had a lot to do with green – and I’m not referring to Holi! The budget we had last week had a significant emphasis on the green industry. Going by the number of different schemes and incentives showered on the segment, I’d be inclined to agree with some news articles which suggested that Green has displaced IT as the flavour of the season (and let’s hope for the following few seasons as well).

The following are some of the prominent green aspects of the budget:

(1) A 61% increase in the outlay for the ministry of new and renewable energy

(2) Funds for the National Action Plan on Climate Change

(3) Steps to make solar and wind energy affordable – a concessional customs duty of 5% for equipment needed to set up photo voltaic and solar thermal power units. Exemption from central excise duty.

(4) Exemption for customs duty and special additional duty from ground source heat pumps used to tap geo-thermal energy.

(5) Allocated Rs 500 crore for National Ganga River Basin Authority to protect the river from sewage.

(6) There will be a clean energy cess of Rs 50 a tonne on Indian and imported coal. This money will build the corpus of the clean energy fund.

(7) A nominal duty of 4 per cent on electric vehicles and exempted basic customs duties and special additional duty from some critical parts of sub-assemblies.

(8) Reduced excise duty on LED lights to 4%.

(9) To address energy deficiency in Ladakh, the Finance Minister proposed to set up solar, small hydro and micro power projects at the cost of Rs 500 crore in the area.

All right, let me get my perspective right. Outlays of sums such as 500 crores and 200 crores are not exactly huge for a large country like India. Especially when you consider that the total expenditure in 2010-11 was pegged at over 11 lakh crores, and at an estimated 25000 crores that’s supposed to flow into renewable energy in 2010-11.

Some “pundits” have also started predicting that people could line up to buy solar panels for their rooftops now that these are expected to cost 15-20% less. Yep, and my dad will become the next American president.

For renewable energy to explode in the country, the sector requires even more sops than the budget has proposed. Our country is expected to add an additional 150-200 GW of power in the next ten years. At an approximate cost of 5000 crores per GW,  that alone would require an investment of about 10,00,000 crores (that would be the entire budget expenditure for 2010-11!). You can easily understand the magnitude of support required.

Again, just increasing the cost of large cars (through a 2% increase in excise) is unlikely to dissuade car buyers. Heck, can you visualize these folks who go in expensive cars sweat it out among the hoi polloi in our crowded buses? Which is say to that unless the alternative (public transport) is tolerable enough to use, such small price increases will not prove to be a deterrent for buyers. I’d have ideally liked larger outlays for making our roads better and wider, and providing specifically designed paths for bicyclists – I bicycled 10 kms each way for four months to my office before giving up owing to the pathetic conditions of our roads, so you could say I have some qualifications in this regard.

I can go on adding more such reasons why this budget, though having a focus on green, is not exactly bright green in colour.

But wait. It’s not the budget alone that we should consider. Also consider that the budget comes on top of ambitious schemes such as the National Solar Mission and the recently announced GBI (generation based incentive) for wind at 50 paise per kWh. And the fact that MNRE under Farooq Abdullah has really been proactive on a lot of other “green” fronts. These things have a nice habit of adding up in such a way that the whole is much more than the sum of parts.

In any case, having been around for so long in this country, I have learnt to count my blessings. However small they are.

Hope you are enjoying the EAI newsletter. Do let me know what you think and how I can do better.

Narasimhan Santhanam
EAI – Energy Alternatives India @ www.eai.in
Mob: +91-98413-48117
narsi@clixoo.com