Possible impact of Indian Budget 2012 on Power and Energy Sector

Possible impact of Indian Budget 2012 on Power and Energy Sector.

After the release of Union Budget 2012 in India, industry experts in each sector have started analysing the probable impact of budget on their business and industrial sector. The featured story was the increase in the number of services for which service taxes will be charged. This decision has already triggered a price rise in FMCG and food products.

In this post, I want to point out the possible impact of the union budget on the power and energy sector.

First of all I would like to point out the key point in the Budget that is going to influence the whole electrical or power industry. That is the decision of reducing the import duty on coal.

At first look, this decision of reducing the coal import duty will surely help out curbing the energy deficit of our country. Thermal power stations like NTPC and other industries having their own captive power plants will surely benefit from this by increasing their production capacity. Since the price of coal will decrease, so their operational cost will automatically come down along with increased power production.

But this decision is going to badly affect the renewable energy sector which is still in its incubation state in India.

Increased import of coal is not good for us in the long run. This will increase our dependency on non-renewable exhaustible sources of energy. In addition to this, it will add to environmental pollution.

In spite of the fact that India has a huge potential for wind energy which is currently the most efficient renewable energy source, Indian Budget 2012 has not laid any special focus on this sector.

Due this decision, solar energy sector is going to be the most affected industry due to the heavy prices of photovoltaic cells.

Concluding this post, as per my opinions, the budget must have laid out some incentives or policies which could have helped the renewable energy sector of our country, so that we can reduce our dependency on the conventional sources of energy.

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