Implications of Budget 22 on Electrical Sector

Dear All

We have tried to summarise the implications of Budget 2022 on our Electrical sector. This budget has not given direct financial outlay to electrical infrastructure or projects but there are some policies and schemes which will indirectly boost the electrical sector's growth in long term such as:-

-PM Gatishakti scheme:- PM GatiShakti may prove to be a transformative approach for economic growth and sustainable development. The approach is driven by seven engines, namely, Roads (Rs 20000 crs FY22-23) , Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure. All seven engines will pull forward the economy in unison. With the investment in all the above 7 engines electrical sector infrastructure will grow hand in hand to keep up with energy requirement for each engine's growth but we need to see actual implementation of the schemes and policies in long term.

-Govt has given lot of focus on EV infrastructure development and with EV growth the electrical infrastructure has to be developed and indirect investment has to be done to manage higher electricity consumption in EV sector. Policy on EV battery swapping will boost EV vehicles demand.

-With energy storage systems coming under infrastructure category we will see boost in this sector as well.

-Customs duty exemption given to steel scrap last year is being extended for another year to provide relief to MSME secondary steel producers. This may help in reigning volatility of MS prices.

-To facilitate solar capacity 19,500 crore has been provided for Production Linked Incentive for manufacture of high efficiency modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules in our country.

-Railways will develop new products and efficient logistics services for small farmers and Small and Medium Enterprises, besides taking the lead in integration of Postal and Railways networks to provide seamless solutions for movement of parcels. Need more information to see how this will benefit the MSME's and farmers both.

-Lot of SEZ projects have not progressed are lying unused. The SEZ Act will be replaced with a new legislation that will enable the states to become partners in ‘Development of Enterprise and Service Hubs’. This will allow optimal use of available infrastructure and enhance competitiveness of exports.

-Emergency Credit Line Guarantee Scheme (ECLGS) has provided much-needed additional credit to more than 130 lakh MSMEs. ECLGS will be extended up to March 2023 and its guarantee cover will be expanded by 50,000 crore to total cover of 5 lakh crores.

-Raising and Accelerating MSME Performance (RAMP) program with outlay of 6,000 crore over 5 years will be rolled out. We need to see how this rating scheme will benefit MSME's in long run.

-In 2022-23 80 lakh houses will be completed for the identified eligible beneficiaries of PM Awas Yojana, both rural and urban. 48,000 crore is allocated for this purpose.

Some budget pointers for improvement in compliance and ease of business are:-

-Necessary amendments in the Insolvency and Bankruptcy Code will be carried out to enhance the efficacy of the resolution process and facilitate cross border insolvency resolution.

-Systems to Speed up the voluntary winding-up of companies from the currently required 2 years to less than 6 months.

-Taxpayers can file an Updated Return on payment of additional tax within period of 2 years.

-To reduce delays in payments, a completely paperless, end-to-end online e-Bill System will be launched for use by all central ministries for their procurements.

-To reduce indirect cost for suppliers and work-contractors, the use of surety bonds as a substitute for bank guarantee will be made acceptable in government procurements.

-Period of incorporation of the eligible start-up was extended by one more year to avail Tax incentive.

The budget was more focused on proper and efficient implementation of the earlier policies rather than coming with some drastic changes in taxation or new policies. Though some measures could have been taken to reign in inflation which may prove barrier in expected growth of 9.2% in FY 22-23.

Regards

TEAM JDS