Budget disappoints electrical industry

The electrical industry is generally disappointed by the Union Budget 2009-10. 

Considering the government's promise of electricity for all by 2012, the only specific mention in the entire Union Budget for the power sector includes the allocation of Rs 7,000 crore (Rs 70 billion)for RGGVY and Rs 2,080 crore (Rs 20.8 billion) for the RAPDRP programme, Indian Electrical and Electronics Manufacturers Association, said.

IEEMA welcomes the continuation of reforms, abolition of the fringe benefit tax and proposed introduction of GST on April 1, 2010.

IEEMA feels that although the government has announced a Rs 1 lakh-crore (Rs 1-trillion) fund availability over the next 18 months through the Indian Infrastructure Financial Corporation Limited for refinancing 60 per cent of the bank loans for public/private partnership projects, how much of it will really go towards the power sector is not clear.

It is also to be noted that for addition of one MW of power, an investment of around Rs five crore is needed and a similar amount is needed for evacuating and distributing the power to the consumers, it said.

Looking at the planned power sector expansion, which could need investments of lakhs of crores of rupees, it is not clear where from and how these funds will be made available, IEEMA said.

IEEMA had requested the government for infrastructure status under IT Act 80 IA for boosting power sector reforms and attract investments and that such should be extended in full to the power sector.

Similar incentives have made the telecom and the housing sector an unqualified success. Unfortunately, the government has not extended this facility to the power sector in this Budget, the trade body said.

The silver linings in this budget are the positive announcements by the Government like increased allocation of Rs 2,130 crore (Rs 21.3 billion) for higher education and extending full interest subsidy to needy and economically backward students.

The gvernment also has extended the scope of weighted deduction of 150 per cent on expenditure incurred on in-house R&D to all manufacturing industry.

This may help provide impetus for much needed R&D in  the core electrical industry, IEEMA said.