In last year's Budget, the government had allotted around Rs 1000 crore for solar power projects
The Power Ministry should push for higher allocation of funds for clean energy like solar and wind, says Suman Sinha, founder CEO of ReNew Power, a clean energy firm.
In an interview with CNBC-TV18, Sinha says the government should incentivise clean energy firms by allowing them costs benefits.
Sinha is hopeful of an overall reduction in Minimum Alternate Tax in this Budget. He also expects from forex hedging mechanism to be announced.
He says the increase in solar capacity will depend on government policies.
In last year's Budget, the government had allotted around Rs 1000 crore for solar power projects.
These included Rs 500 crore for Ultra Mega solar power projects, Rs 400 crore towards solar power driven agricultural pump sets and Rs 100 crore for 1 MW solar parks on banks of canals.
Below is the transcript of Sumant Sinha's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Sonia: What is your expectation from the Budget this time for the sector?
A: I do not exactly know what the finance minister (FM) has in store right now but hopes being eternal for all of us and so there is a lot of hope and expectation from the Budget.
What we would like to see in the Budget is action on three different fronts. One is on the fiscal front. Today we are subject to Minimum Alternate Tax (MAT) and there are certain types of investors who are subject to depreciation. What we would like is some form of levelisation of the playing field which will also help us reduce cost and if that cost reduction happens then renewable energy will become much acceptable to distribution companies and therefore will allow us to proliferate much more. So some sort of reduction on MAT whether in the form of generation based tax incentive or just a straight forward reduction on MAT – that is one thing that we would be looking for.
The second is in the area of financing and on financing there are so many things that can be done. Simple things like providing some sort of cover for Fx hedging; if we borrow from overseas, hedging costs are about 6-7 percent and therefore they make borrowing from overseas fairly unattractive even though there is a huge pool of funds out there and the Indian banking sector is fairly starved to lend to the sector. Therefore, the question is can the government give us some sort of Fx hedge mechanism that allows to reduce cost or perhaps even some sort of interest subvention from the National Clean Energy Fund, something like that could be very useful and of course the creation of the Infrastructure Investment Trusts (InvITs). The InvITs were talked about for the last couple of years but there are some tax issues right now that prevent them from becoming viable. I know that the government probably is working on this and hopefully will be able to remove some of the tax hurdles on the creation of InvITs. So something like that will also be positive for people like us to off lay our assets into longer term pool of investors.
The last thing I would say is there is a lot of money sitting in National Clean Energy Fund and at the same time there are lots of arrears right now that the ministry of renewable energy has to pay out. So can we get bigger allocation from National Clean Energy Fund to support some of these activities? Those would be our expectations from the Budget right now.
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