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Plan allocation for power sector (excluding RGGVY) has been doubled to Rs 51 bn in FY11.
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The government has proposed to introduce a competitive bidding process for allocating coal blocks for captive mining to ensure greater transparency and increased participation in production from these blocks.
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A 'coal regulatory authority' is proposed to be set up to take care of issues regarding pricing and performance of coal mining companies.
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Outlay for renewable energy has been increased by 61%.
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Standard rate of excise duty, which was reduced to 8% in February 2009 as a part of the stimulus package on non-petroleum products has now been increased to 10%.
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'Clean Energy Cess' of Rs 50 per tonne to be imposed on domestic and imported coal.
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Excise duty exemption provided on goods supplied to mega power projects from which supply of power has been tied up through tariff based competitive bidding or a mega power project awarded to a developer on the basis of such bidding.
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Excise duty exemption on specified list of goods used for the manufacture of rotor blades for wind operated electricity generators extended to some items.
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Excise duty exemption provided on specified goods required for initial setting up of solar power generation project or facility.
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Rate of minimum alternate tax (MAT) on book profits has been increased from 15% to 18%. Surcharge on corporate tax reduced from 10% to 7.5%.
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Higher allocation for power sector (excluding RGGVY) to aid new generation capacities that had been stalled for want of funds.
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Competitive bidding for allocating coal blocks to help bring about a level playing field in the sector as more and more generation companies are looking to have their own supplies of coal.
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Higher outlay for renewable energy to help power companies given the mandatory requirements to source a part of their power distribution requirements from clean fuel sources.
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Hike in the standard rate of excise duty to 10% to make equipments a bit more expensive that will impact the overall project costs for power companies.
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'Clean Energy Cess' of Rs 50 per tonne on domestic and imported coal to impact power companies across the board.
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Higher MAT to impact companies falling in this tax bracket.
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Lower surcharge on corporate tax to help companies reduce their overall tax payments.
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Over the past few quarters, the power sector has seen hard times given the severe liquidity crunch that hit existing as well as new projects. And as such, the sector once again saw capacity addition that was way below the targets set out as part of the XIth Five Year Plan. While the situation on the funding side has improved considerably since the middle of 2008, companies are stepping up on new projects with utmost caution. This is especially given that linkage for fuel (especially coal and gas) is becoming a tough nut to crack. However, rural electrification continues to get a boost in each passing budget and so is the improvement in the T&D network. Budget 2010 was no different, as it allocated higher funds for the development of the power sector with a view of speeding up the expansion of new generation capacities.