Financial year 2011-12 is important for the power sector in India – it is the last year of the Eleventh Five-Year Plan and the last year to achieve the target of electricity for all planned under the National Electricity Policy. The allocation for power in the coming budget will be focusing on two issues — furthering distribution reforms and taking measures for energy security.
The Restructured-Accelerated Power Development and Reforms Programme (RAPDRP) is expected to get a lions share of the plan outlay in the budget. Part A of the plan, which involves putting in IT system for preparation of baseline in urban towns, will require over Rs 3,000 crore in 2011-12. The Part B, which will largely focus on strengthening the distribution network, will require over Rs 25,000 crore and shall be spread over next 2-3 years.
One of the key features of strengthening energy security was the plan for setting up a coal regulatory authority. The draft bill is expected to be tabled in the ongoing budget session. This will go a long way in bringing transparency in allotment, easing coal deficits and quality issues that cause problems for a large number of power plants.
Another energy security issue which got a fillip in the last budget was focus on the renewable sector. The plan outlay for new and renewable energy was increased to Rs 1,000 crore in the last budget. The investment requirement for this plan is expected to increase further and we can expect doubling of the plan outlay in the next budget.
The investments under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) was considered by the finance minister under Bharat Nirman in the last budget. Being the last year to achieve the target of electricity for all, the investment requirement for this rural electrification scheme is going to be around Rs 5,000 crore in fiscal 2011-12.
The power sector requires a 150 per cent increase in plan outlay, excluding RGGVY allocation. We can expect the plan outlay size to be in the region of Rs 12,000 crore in 2011-12.
The author is executive director (government reforms and infrastructure development) of PwC India