February 29, 2016

Budget 2016: Aim to provide power 24/7 to every house by 2019

After the announcement of the Union Budget for fiscal year 2016-17, Piyush Goyal told CNBC-TV18 that by the end of 2017, the government will ensure to provide electricity to 18452 villages located in remote locations and aims to provide electricity 24/7 to every household in India by 2019.

Finance Minister, Arun Jaitley has been generous in his budgetary allocation and we will achieve our targets faster than advocated by the Budget, says Piyush Goyal, Minister of Coal and Power .

After the announcement of the Union Budget for fiscal year 2016-17, Piyush Goyal told CNBC-TV18 that by the end of 2017, the government will ensure to provide electricity to 18452 villages located in remote locations and aims to provide electricity 24/7 to every household in India by 2019.

Claiming that he will outperform the Budget allocation and expectations, Goyal said that the citizens can keep an eye on his performance through GARV, an app introduced by the Rural Electrification Corporation ( REC   ).

Commenting on green cess, he said that it will add a nominal amount of 12 paise per unit to power generation and will generate revenue of around Rs 8000 crore for the government.

Below is the verbatim transcript of interview with Shereen Bhan on CNBC-TV18.

Q: As far as the rural electrification plan is concerned, the government has allocated Rs 8,500 crore for the Gram Jyoti Yojana but 100 percent rural electrification now being advanced to 2018 May if I am correct?

A: The Honourable Prime Minister had announced on August 15, 2015 that we will make sure within thousand days that electricity gets connected in every village and the power reaches there. We are committed to that. The Finance Minister has been generous with his Budgetary allocation and I assure the nation through you that well before the target, possibly by end of 2017 itself, we will ensure that these 18,452 villages — by the way these are the worst villages, they are at the top of mountains, they are in dense forests, we will make sure the electricity reaches there by end of 2017. An updated figure today of completed village is 5,899. By March, we should cross 7,000. So we have already done one-third of the villages, we are committed to doing this and by 2019, we will also make sure every home gets electricity 24/7.

Q: So you are saying that you will better on what the Budget is articulated in terms of rural electrification rollout?

A: Yes, certainly. We will do it much faster. We are very confident, we have a well rolled out programme, it is available on our app, which I have urged, you and your readers to download. It is an app called Garv and that will help you monitor my performance and keep me in check.

Q: Let me overall ask you because as far as infrastructure investment thrust is concerned between the roads and railways; roads, the allocation of Rs 55,000 crore and another Rs 15,000 crore through bonds, all together with the Pradhan Mantri Gram Sadak Yojana (PMGSY) it works out to Rs 97,000 crore and between railways and road it works out about Rs 218,000 crore. Do you believe that when it comes to capital expenditure especially on the infrastructure side is concerned; we will see a significant liftoff?

 A: This Budget has focused its energy on an all encompassing vision to take different sectors forward in different ways. If you look at the road and rail sector, they are catalysts of growth of job and employment and they can kick-start many other sectors, be it construction industry, be it electrical industry, be it cement and steel industry, so this has a huge impact, multiplier impact on the economy but this is not all, this is one sector, be it education, be it the rollout of greater healthcare services while rural electrification is going on. They are also focusing on Ujwal DISCOM Assurance Yojana (UDAY), which has many other dimensions; feeder segregation, it has dimensions of smart metering, it has dimensions of energy efficiency. We are looking at LED rollout for energy efficiency which is the world’s largest programme ever embarked in the history of the world.

Q: Could I ask you about the green cess and what the assumption is as far as the green cess is concerned?

A: There are two elements of this. One is on the coal which has been doubled from 200 to 400, which I welcome. Its impact on power generation is very nominal. It is about 12 paisa per unit and will give the government about Rs 6,000-9,000 crore, which they can deploy for green energy and for the support renewable energy, which is good for all. It adds to India’s energy security and addresses the serious challenge of climate change.

Q: Just on the coal cess, you are saying that it will work out to an additional 12 paisa per unit and the government could mop up between Rs 6,000-7,000 crore on account of the hike in the cess?

A: About Rs 8,000 crore is what I think the Honourable Finance Minister has budgeted, it could be slightly more or less but the bigger picture is that while the Uday comprehensively addresses these issues, we will be saving Rs 1,80,000 crore annually only in the power sector. So this Rs 8,000 crore is very miniscule cost to pay — when you will juxtapose it to the largest saving but this small amount will go a long way for India’s energy security as well as for addressing the climate change issues.

Q: Let me also ask you about what the government intend to do on the fiscal review of the FRBM, in fact the finance secretary also alluding to the fact that it makes more sense now to look at a consolidated fiscal deficit of the centre and the state and there have been concerns on what the UDAY scheme for instance could do as far as the state fiscal deficit is concerned. How does this play out to your mind and what have been the consultations that you for instance have had on the impact of UDAY?

A: Except for one or two individuals in the country or one or two journalists, nobody else has ever criticised UDAY or found any problem with the scheme. What we have only done is, we have converted a de facto borrowing of state into a de jure borrowing. This borrowing was already there, there is no additional borrowing. It is just that it was parked into DISCOM but the whole world knew and I talked to several rating agencies, they were already factoring in this borrowing as a part of the fiscal problems of the state. So let me reassure that we are not causing any additional borrowing.

On the contrary we are solving the distress of the banking sector which could otherwise have been faced with colossal problem much worse than today. We are at the same time strengthening the DISCOMs so that they can purchase more electricity and serve the people with 24/7 power, something they have not been doing for lack of ability to buy power and as a consequence we will save the banking sector from another three or four lakh crore of stressed assets and stranded assets which otherwise do’t have demand. 

Therefore, UDAY has comprehensively resolved these problems and almost unanimously across the world people have appreciated the deep impact and the transformative impact, UDAY will have for a permanent resolution of the power sector problems. 

Q: Since you were talking about stalled projects also, the government in order to expedite investments into the infrastructure sector is looking at a public utility resolution bill. It is also looking at bringing in some PPP, concession agreement guidelines which will be issued. Can you take us through what this would mean specifically for the power sector?

A: In the power sector the regulatory issues are not something which is causing any concern. There were a few issues particularly related to change in domestic laws which we have already addressed through the tariff policy which the Union Cabinet approved some time back. There are’t any significant challenges as such and those that are there are already under consideration of the regulatory authorities. So, really that mechanism will be more useful in other PPP projects particularly relating to the road sector.

In the power sector by and large issues are all getting resolved. If we still have any issues we will be happy to get it resolved through the new mechanism that is being evolved. I do’t see any great problem in sorting it out bilaterally.

Q: Now that the Budget is out of the way when can we expect some movement on the pending big ticket items as far as your ministry is concerned? When do you now move on UMPPs, when do we finally see you move as far as the plug and play model is concerned as well?

A: In fact all these days we have been working to ensure that the UMPPs that we take out are on a plug and play and which is why there were some time taken. We do’t want to do a half baked auction which leads to further stress and stranded projects. Also we are calibrating the demand supply situation to ensure that these projects come up simultaneously with adequate demand in the system.

Having said that we are coming out with significant improvements in the grading of coal so that quality issues related to coal get resolved. We are coming out with a comprehensive set of guidelines for coal swapping and exchange of coal initially between public sector and government entities, later between private sector and government or private sector and private entities also so that we can rationalise the consumption and movement of coal to bring down the stress and cost on the system.

We are also looking at certain transformational plans on the transmission side. You are aware that we have added 71 percent transmission capacity to south India in the last 18 months. We will add a further 80 percent in the next 18 months. So, effectively 3-3.5 years of Prime Minister Modi’s government and we would have done a 3x growth in the transmission to south India and permanently solve their problem and at the next level we will do a doubling of that in two years after that. So, effectively in six year India would have added five times the transmission what we inherited in 2014.

Coal production is on a roll. We are already at about nine percent growth this year on the back of 6.9 percent growth last year. Both years put together would possibly take growth to a level which has been not seen in the history of India and would actually add more coal than was added in the last 7 or 8 years in two years alone. So, in effect this government is focusing on a self reliant, vibrant economy where power for all is a given.

Q: I am digressing away from your ministries and asking you a rather over arching question as far as the Budget is concerned. This has to do with the government’s intent to try and address the legacy retrospective issues. They have opened up a window giving an opportunity to the likes of Vodafone to come to the table, pay the principal amount and the government will waive off the arrears as well as the interest. The question is and I am quoting to you what P Chidambaram told me in an interview that you have 282, you are a majority government but you are acting like you are a minority government. You could repeal the retrospective tax amendment altogether, why do’t you go all the way?

A: If we repeal the amendment we will be doing a retrospective change which we are committed not to do. P Chidambaram is getting wiser out of government than he was in government. In the first place this tax was ill-conceived. Finance Minister Arun Jaitley and me both are on record in the Rajya Sabha for wholesomely criticising this tax when it was brought in.

Q: You can address that issue now. P Chidambaram did not have the numbers, you have the numbers. You can address these issues.

A: If they did not have the numbers how were they in the government. They should have left the government and resigned and gone away. They had the numbers in a coalition which they should have used. I think that is a lame excuse for a former finance minister to give. He should truly appreciate that honourable Finance Minister Arun Jaitley has bitten the bullet and look at the logic behind this. The tax is a fact, it has been brought in my the last government. Obviously since the Supreme Court had also ruled that it is not taxable, it is quite clear that the tax payers themselves could not have understood that this tax is payable.

So, levying tax and penalty on them or interest and penalty on them is grossly unfair. So, Finance Minister is taking a right path. Now that it is a part of the statute the tax certainly is payable but because it was not out of any deliberate effort not to pay the tax because it was an interpretation which even the Supreme Court had upheld, it is only appropriate that interest and penalty should be waived. I think it is a win-win solution and my own informal discussions tell me that most of these companies will be delighted to settle these matters and close it once and for all.

Q: You are saying you have had informal discussions with companies like Vodafone and you believe that they will take up the government on this offer?

A: I have not had informal discussions with the companies but I have certainly had informal discussions with tax experts who agree with this thinking. Now that the tax has come on the statute everybody understands that it will payable. Their bigger angst is that why should they pay interest and penalty when even the Supreme Court had understood the interpretation in the same way that they had. So, these are informal discussions with tax experts who have just given us the way out of this controversy.

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