Host of measures will help power sector

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India was one of the first countries to adopt counter-cyclical measures to combat the slowdown and this helped our economy emerge from the slowdown in the shortest possible time. Finance minister Pranab Mukherjee, in his Budget of 2010-11, is clearly following up on this success, with a Finance Bill that focuses on all-round inclusive growth without losing focus on fiscal discipline.

The Finance Bill 2010 clearly seeks to balance three compulsions—strong economic growth, lower food prices and fiscal responsibility. His support programme extends to all stakeholders. Indian industry has been able to hold its head high in these difficult times thanks to robust consumer spending. The finance Bill promises to keep this dream run intact by providing for income tax relief so that there is more money to spend.

The need to generate more revenues has led him to impose a cess of Rs 50 per tonne on coal, to raise levies on petro products and hike MAT. At the same time, he has brought down the surcharge payable by domestic companies to 7.5%.

In the power sector, we have to work out the arithmetic. He has doubled the outlay on the power sector and increased the refinancing window enjoyed by IIFCL. Overall, the host of measures rolled out for non-transport infrastructure segment would help the sector.

The Finance Bill clearly states that the aim of the policy and tax measures would be to bring down the cost of power generation and transmission and the detailed sums on the sector will be worked out soon.

The Finance Minister has also sought to balance the short-term targets with longer terms goals. In the short-term, the challenge was the goal of achieving 10% growth per annum.

The major gaps in development particularly in infrastructure and rural sector have been given due attention.

In the medium term, the finance minister has brought down fiscal deficit as a step to fiscal consolidation. In doing so, he has largely depended on rolling back excise duties by 2%.

The government will borrow Rs 3.45 lakh crore next year. The FM gave the assurance that this borrowing would not impact efforts of the private sector to raise funds. Nonetheless, since private sector will have to invest much more in future, there may be some pressure on interest rates and this aspect should be watched.

I am optimistic that the recovery will be sustained and a considered withdrawal of the stimulus package will be his chosen...

Source: http://www.financialexpress.com/news/Host-of-measures-will-help-power-sector/584914/