Union budget 2010: Solar, UIDs all the way!

As expected, solar photovoltaics (PV) is the largest beneficiary of the UPA government’s union budget 2010, which was presented today by India’s Union Finance minister, Pranab Mukherjee. On India’s growth, he said that a 10 percent GDP growth rate is likely in the future.

Late last week, I had said that it would be a great surprise if solar/PV was not part of the budget, given the NSM. Well, it now has a major role, as do UIDs. However, as I expected, there is hardly anything for the semiconductor/VLSI industry segments, and definitely not what the industry had proposed. Apparently, semiconductor/VLSI is not yet a critical sector, and will need to wait for its time. Therefore, I am not surprised! It didn’t happen last year, and well, no change this year either!

Key budget highlights
* The plan outay for new and renewable energy has been increased by 61 percent from Rs. 620 crores to Rs. 1,000 crores. This is following the Jawaharlal Nehru National Solar Mission (NSM) announced last year, which aims for 20GW by 2022.
* Proposal to establish national clean energy fund.
* There are proposals for setting up solar and wind power projects in Ladakh region as well.
* Allocation for power sector doubled to Rs. 5,120 crores.
* Allocation of Rs. 1,900 crores for UAID scheme (UID projects).
* UID numbers are ready for take off. UID authority has been constituted, and it will issue the first set of UIDs by the end of this year.
* Smart cards extended to NREGA.
* The Unique Identification Authority of India to get an allocation of Rs. 1,900 crores.
*  An effective tax administration and financial governance system calls for creation of IT projects which are reliable, secure and efficient. IT projects like Tax Information Network, New Pension Scheme, National Treasury Management Agency, Expenditure Information Network, Goods and Service Tax, are in different stages of roll out. To look into various technological and systemic issues, the minister proposes to set up a Technology Advisory Group for Unique Projects (TAGUP) under the Chairmanship of Nandan Nilekani.
* The budget proposed to further simplify FDI.

New and Renewable Energy
* The Finance Minster proposed to increase the Plan Outlay for the Ministry of New and Renewable Energy by 61 percent  from  Rs. 620 crores  in 2009-10 to  Rs. 1,000 crores in 2010-11.
* To address the problem of energy deficiency in the Ladakh region of Jammu & Kashmir which faces extremely hard climate, the government proposes to set up solar, small hydro and micro power projects at a cost of Rs.500 crores.
* The Ministry of new and Renewable Energy (MNRE), which aims to develop and utilise new and renewable sources of energy fur supplementing energy requirements of the country in an eco-friendly and sustainable manner, has got a total Plan Outlay of Rs. 1,950 crores, which includes Rs.950 crores as IEBR in the annual plan for the year.  The following physical targets/activities have been set during the financial year:
* 2972 MW Grid-Interactive Power capacity addition from Wind, Small Hydro, Biomass, Power/Cogeneration, Urban & Industrial Waste to Energy and Solar Power; 142 MW eq. Off grid / Distributed Renewable Power Systems.
* Provision of basic electricity/lighting facility through SPV/other RE systems and devices, including DRPS in 1500 remote villages/hamlets; and Family type Biogass Plants of capacity of 0.30 million m2 (1.5 lakhs nos.).
* Deployment of Solar Water Heating Systems of 1.00 million m2; Promotion of Energy – efficient Buildings (1 million sqm. Floor area) and Development of Solar Cities.
* R&D activities on different aspects of new and renewable energy technologies; support to MNRE Centres /institutions and Standard and Testing; Renewable Energy Resource Assessment.
* Information, Publicity and Extension (IPE) of Renewable Energy systems; International  Relations; Administration and Monitoring including HRD and Training; Support to States, Public Enterprises and Industry  including HRD and training activities to be undertaken under Solar Mission.

Tax proposals
* GST to be rolled out by April 2011.
* Rs 1133 crores outlay for launch of GST.
* SARAL – II form for individuals ready for the coming year in a simple format in only two pages.
* Computerisation of commecial tax collection in states.
* Automation of central excise and service tax already rolled out.

Direct taxes
* Corporate tax hiked; MAT increased from 15 percent to 18 percent
* Current income tax slabs extended as follow:
Rs 1.6 lacs — nil
Rs. 1.6 lacs – Rs. 5 lacs – 10 percent
Rs. 5 lacs – Rs 8 lacs – 20 percent
Above Rs 8 lacs — 30 percent

Indirect taxes
* Under the NSM — concessional customs duty to machinery, equipment, applicances etc., required for setting up PV and thermal power units.
* Wind energy generators exempted from central excise duty.
* LED lights — central exicse duty reduced from 8 percent to 4 percent.
* To waive excise duty and solar and PV panels.
* Concessional 5 percent duty on set up of solar power unit.
* Excise duty on CFL halved to 4 percent.
* 4 percent duty on electric cars and vehicles.
* Mobile phone domestic production picking up. To encourage manufaturers of accessories, exemptions extended.
* Tax exemptions have been announced for equipment used in solar systems and wind energy system, LED lights, electric cars, cycle rickshaw, mobile phone components and certain medical equipment.