Offerings in The Union Budget 15- 16

Power

5 UMPPs
Plug & Play model for quick clearances
Additional depreciation @ 20% is allowed on new plant and
machinery installed by a manufacturing unit or a unit engaged in
generation and distribution of power

Rural
Electrificati
on

Electrification, by 2020, of the remaining 20,000 villages in the

country, including by off-grid solar power generation.

RE

INR75 crore for electric cars production under Faster Adoption and
manufacturing of Electric Vehicles (FAME) policy.
Target 2022: 100 GW in solar; 60 GW in wind; 10 GW in biomass
and 5 GW in small hydro.
Reduction in Basic Customs Duty to reduce the cost of raw
materials- Active Energy Controller (AEC) for use in the
manufacture of Renewable Power System (RPS) Inverters to 5%,
subject to certification by MNRE.

Coal

Clean Energy Cess from INR100 to 200 per metric tonne of coal to
finance clean environment initiatives.

Infrastructure
INR 70,000 crores to Infrastructure sector.
Plug & Play model for quick clearances- roads, ports, rail lines,
airports.
Tax free Infrastructure bond for rail road and irrigation.
National Investment & Infrastructure Funds which is expected to
have an annual flow of INR 200 Billion.
Suggested
Measures

PPP model for infrastructure development to be revitalised and

govt. to bear majority of the risk.
e-Biz Portal which integrates 14 regulatory permissions at one
source. Ease of getting permission & clearances.
Pre-existing regulatory mechanism- to examine the possibility and
prepare a draft legislation where the need for multiple prior
permissions can be replaced.
Public Contracts (Resolution of Disputes) Bill to streamline the
institutional arrangements for resolution of disputes arising in
public contracts.
Regulatory reform law that will bring about a cogency of approach
across various sectors of infrastructure, common approach and
philosophy in the regulatory arrangements prevailing even within
the different sectors of infrastructure.

Roads

Budgetary support INR 14,031 crore

INR 1,200 crore DMIC corridors
Complete 0.1 million Km.s of highways already under
constructions

Offerings in The Union Budget 15- 16

Infrastructure

Rail

Budgetary support INR 10,050 crore.

Port

Corporatisations of PSU run major ports under Company Act.

Telecom

National Optical Fibre Network Programme (NOFNP) of 7.5 lakh

kms. networking 2.5 lakh villages.
Reduction in Basic Customs Duty to reduce the cost of raw
materials, HDPE for use in the manufacture of telecommunication
grade optical fibre cables from 7.5% to Nil.

Housing &
Urban
Developme
nt

INR 22,407 crore

Irrigation &
Pumping

INR 5,300 crore, under Pradhan Mantri Krishi Sinchai Yojana

Investment
FDI in Alternate Investment Funds.
Replacing foreign portfolio investments and foreign direct
investments with composite caps.

Impact Assessment of Union Budget 15- 16

Announceme
nt

Impact

Power
UMPP

Will add 20 GW of more efficient power plants, will improve the

power availability situation of the nation. The background work
done for the earlier attempted UMPP bids will speed up the
process.
But the concern is the availability of such huge quantum of
finance, going by the unfavorable time for the banks and other
financing agencies.

20%
Depreciation

It would be having a positive impact on the sector, although the

quantum of benefit would be moderate.

RE
175 GW
Installed
Capacity

The goal seems unrealistic. But if could be achieved the carbon

footprint of an equivalent of 85 GW of coal based thermal power
generation can be offset. Power availability of the nation would
see a growth. But then is there enough power evacuation infra
available to address this huge quantum of capacity installation?

Impact Assessment of Union Budget 15- 16

Announcement

Impact

RE
INR75 crore for
electric cars
production

The impact would be positive, but low as it would only be

benefiting a small portion of everyday transport, usually
helpful for small distance commute.

Reduction in Basic
Customs Duty to
5% for Active
Energy Controller
(AEC) for use in
the manufacture
of Renewable
Power System
(RPS) Inverters

The impact of this cost reduction would be positive on the

sector, but the impact would be low. As this component
forms a very minute part of the project cost.
And again the implementation of the same is subjected to
the approval of MNRE.

Coal
Increase in Clean
Energy Cess from
INR 100 to 200 per
tonne

The impact would be negative for the coal mine developer

as well as the coal procurer, as this will increase the cost of
production. But the impact would not be felt much as this
rise of cost forms 4% or even less of the landed cost of coal
at the coal procurers site.
The positive impact of this increase in cess would be felt as
increasing the amount in Clean Energy Fund by 100%.

Infrastructure (Suggested Measures)

Plug & Play model

Positive move. Will speed up the clearance process thereby

decreasing the overall project completion time. It will boost
developers morale.

Tax free
Infrastructure
bond

Positive impact. Obvious to increase the investment to the

sector.

National
Investment &
Infrastructure
Funds

Positive again. Will enable government to take up projects

as well as give debts to facilitate project developments.

Revised PPP Model

Will bear positive impact on the sector, as large part of the

risk associated with the project developments to be borne
by the Government. Hence will help the investment through
PPP mode to come out of its low phase.

e-Biz Portal

Positive impact. In line with single window clearance

mechanism, but the impact would not be that great until all
the state take part on this.

Pre-existing
regulatory
mechanism

Positive impact. Will reduce the time required for clearance

window.

Public Contracts

Positive impact. Will help to cut short the otherwise long

Impact Assessment of Union Budget 15- 16

Announcement

Impact

Roads
Budgetary

Positive impact.

support INR
14,031 crore
INR 1,200 crore
DMIC corridors
Complete 0.1
million Km.s of
highways already
under
constructions
Add another 0.1
million Km.s of
new projects

Positive impact. Seems a realistic goal.

Conversion of
existing excise
duty on petrol and
diesel to the
extent of INR 4 per
litre into Road
Cess

Positive impact. This would result in an additional sum of

INR 40,000 crore fund for the road sector.

Rail
Allocation of INR
10,050 crore

Positive impact. And allowing FDI in some of the segment is

really impressive to start with.

Port
Corporatisations of
PSU run major
ports

Positive impact. The same can be felt in increase in revenue

and competition.

Telecom
Reduction in Basic
Customs Duty of
HDPE to Nil from
earlier rate of
7.5%

Positive impact. Will result in decreased cost of optical fiber,

a key cost factor in the NOFN goal of government.

Housing & Urban Development

INR 22,407 crore

Positive impact. This investment does mean development of

allied infra.

Irrigation & Pumping

INR 5,300 crore,
under Pradhan
Mantri Krishi
Sinchai Yojana

Positive impact.
A certain part of these pumps involved with irrigation could
be solar based, thus a boon for solar pump sets.

Impact Assessment of Union Budget 15- 16

Announcement

Impact

Investment
Replacing foreign
portfolio
investments and
foreign direct
investments with
composite caps

Positive impact, as the system is being made simple. But

the sectors which allow 100% FDI through automatic route
will remain unaffected.

FDI in Alternate
Investment Funds

Positive impact. With modification on the norms by SEBI,

this will open up another source of funding.

Rural Electrification
Electrification, by
2020, of the
remaining 20,000
villages

Will be positive for the sector. But the goal seems to be

difficult. Even if the numbers of electrified villages reach the
set mark of 20,000, the impact would not be that significant
if they happen to provide electricity connections to just 10%
of the total household of those respective villages as has
been defined by Rural Electrification Policy.

Query Regarding These Points

A uniform abatement is being prescribed for transport by rail, road and
vessel to bring parity in these sectors. Service Tax shall be payable on 30%
of the value of such service subject to a uniform condition of nonavailment of Cenvat Credit on inputs, capital goods and input services.
Presently, tax is payable on 30% of the value in case of rail transport, 25%
in case of road transport and 40% in case of transport by vessels
Exemption to construction, erection, commissioning or installation of
original works pertaining to an airport or port is being withdrawn.