Budget 2020: Rs 4,400-cr outlay for clean air, old power plants to be shut

The government has proposed Rs 5,753 crore outlay for new and renewable energy ministry for 2020-21

Old coal-fired power plants not meeting emission norms will be closed and their land put to alternative use, Finance Minister Nirmala Sitharaman said on Saturday as she provided Rs 4,400 crore in her Budget for measures to ensure clean air. She also announced expansion of PM KUSUM scheme for harnessing solar energy by farmers for achieving diesel-free agriculture eventually.

Besides, the minister indicated in her Budget speech that there would be a new scheme to reduce financial stress of debt-laden power distribution firms and incentives will be provided in form of lower corporate tax for new power projects.

"There are yet, thermal power plants that are old and their carbon emission levels are high. For such power plants, we propose that utilities running them would be advised to close them, if their emission is above the pre-set norms. The land so vacated can be put to alternative use," Sitharaman said.

The new scheme would be implemented by environment ministry with an outlay of Rs 4,400 crore.

"In large cities having population above one million, clean air is a matter of concern. The government proposes to encourage such states that are formulating and implementing plans for ensuring cleaner air in cities above one million. Parameters for the incentives would be notified by the Ministry of Environment, Forests and Climate change. Allocation for this purpose is Rs 4,400 crore for 2020-21," she said.

About this initiative of the government, Power Minister R K Singh told reporters that there are certain plants which either do not have space for putting emission control equipment or they simply cannot do that.

The initiative is expected to nudge states to close all those old thermal power plants and capitalise vacated land.

The finance minister also proposed to extend the concessional corporate tax rate of 15 per cent to new domestic companies engaged in the generation of electricity in order to attract investment in power sector.

In September 2019, the government introduced new provision of offering a concessional corporate tax rate of 15 per cent to the newly incorporated domestic companies in the manufacturing sector which start manufacturing by March 31, 2023, for boosting the sector. Now this is extended to new power plants as well.

"Taking electricity to every household has been a major achievement. However, the distribution sector, particularly the DISCOMS are under financial stress...Further measures to reform DISCOMs would be taken. I propose to provide about Rs 22,000 crore to power and renewable energy sector in 2020-21," she said in her Budget speech.

The power sector is facing stress due to poor financial conditions of discoms in the country. The government launched Ujwal Discom Assurance Yojana (UDAY) in November 2015 to bring about operational and financial turnaround of debt-laden discoms.

On this, Singh has said the ministry has a draft scheme for revival of discoms, which would be finalised and sent for Cabinet approval.

He also said states would have to agree on loss reduction trajectory under the scheme to get financial assistance as well as funding from central PSUs PFC and REC. Giving a thrust to clean energy in the Budget, the finance minister also expanded the existing Pradhan Mantri Kisan Urja Suraksha Utthan Mahabhiyan (PM KUSUM) scheme to provide assistance for setting up about 35 lakh solar pumps by farmers.

"We have provided energy sovereignty through KUSUM.In the Budget speech of July 2019, I had stated that 'annadata' can be 'urjadata' too. The PM-KUSUM scheme removed farmers' dependence on diesel and kerosene and linked pump sets to solar energy," Sitharaman said.

She proposed to expand the scheme to 20 lakh farmers for setting up stand-alone solar pumps and also help another 15 lakh farmers solarise their grid-connected pump sets.

The scheme also enables farmers to set up solar power generation capacity and sell it to the grid. PM KUSUM scheme was unveiled last year with an outlay of Rs 34,422 crore.

The scheme has three components-- 10,000 megawatts (MW) of decentralised ground mounted grid-connected renewable power plants ; installation of 17.50 lakh standalone solar powered agriculture pumps and solarisation of 10 lakh grid-connected solar powered agriculture pumps.

The finance minister also told the House that a scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid would be operationalized under PM KUSUM.

About pre-paid smart electricity meters, she said: "The ministry intends to promote smart metering. I urge all the states and Union Territories to replace conventional energy meters by prepaid smart meters in the next 3 years. Also, this would give consumers the freedom to choose the supplier and rate as per their requirement."

The government has proposed Rs 5,753 crore outlay for new and renewable energy ministry for 2020-21 as against Rs 3,891.74 crore revised estimate for 2019-20. The budget estimate was Rs 5,254.83 crore.

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