Wind energy industry in a tizzy over Jaitley's budget speech

The Hindi version proposes reintroduction of a tax break, but there is no mention of it in the English version online

By Ankur Paliwal
Published: Wednesday 16 July 2014


A sentence in the Hindi version of Finance Minister Arun Jaitley’s budget speech of last Thursday, uploaded on the website of the finance ministry, has created a stir in the wind energy industry. The same sentence, however, was not available in the English version read out by Jaitley while presenting the budget on July 10.

A sentence on page 22 of the budget speech in Hindi reads, Pavan urja ka tvarit vikas karne kay liye main tvarit avmulyan kay fayde ko punh bahal karne ka prastav raktha hun (I propose to reintroduce the benefits of accelerated depreciation to accelerate the growth of wind energy).  But the English version uploaded on the website does not mention this. 

Accelerated depreciation (AD) is a tax break which allows companies investing in wind farms write off about 80 per cent of invested capital in the first year. Launched in 1990s as promotional scheme, AD was stopped by the government in March 2012. It was found that a number of wind farms were set up just to avail this tax benefit. Investors and developers used obsolete technology which delivered only a fraction of the generation potential and important wind sites were wasted

Since then the wind industry has been asking the government to re-introduce AD, claiming that the end of tax break has led to a severe downfall in the wind energy installations in the country. According to Centre for Wind Energy Technology, the wind energy installation in the country in 2011-12 was 3,197 MW which fell to 1,698 MW in 2012-13. The figures slightly picked up to 2,000 MW in 2013-14. The industry says that this because of the re-introduction of another sop called generation based incentive (GBI) which was revived in the budget of 2013-14. GBI which too came to an end with AD in 2012 is an incentive of 50 paisa given to the project developer for every unit of wind energy fed into the grid. This is over and above the feed-in-tariff given to the developer by the electricity discom. While GBI was revived, AD was held back. However, wind industry kept asking for its reintroduction. 

Ministry of New and Renewable Energy (MNRE) too has written to the finance ministry several times for reintroduction of AD but in vain. “AD’s reintroduction will boost wind energy in the country. We will put in safeguards to avoid malpractices,” said a senior official of MNRE. However, the mention of it in the Hindi version of budget speech has got representatives of wind industry flooding the office of MNRE and finance ministry asking for clarifications. “There is a lot of confusion. We have been just doing meetings after the budget day to sort out this issue but no clarity has come so far on what is to be done now,” said the MNRE official. 


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