Mumbai: The recessionary trend cast by Covid pandemic over most of the 2020 is likely to remain the theme for many of the economic decisions that will be taken in 2021.
With two vaccines being administered by India it is just a matter of few months before things will return to normal. One can definitely hope that 2021 will be better than 2020 but the recovery will be gradual.
The National Statistical Office (NSO) have projected India’s gross domestic product (GDP) to contract 7.7% this fiscal. The forecast also said that electricity generation will be one of the sectors which will end the year on a positive note. From this, one can infer that importance of electricity in our lives, and how important it is to get the country’s necessary fiscal support to strengthen this sector in the larger context of the country’s economic health.
The debt ridden Discoms within the Indian Power Sector continue to be a weak link which needs to be addressed. Over the past few years there has been a consistent shift to renewable energy, both in terms of policy and through fiscal incentives provided in Union Budgets. In 2020 the renewable energy sector witnessed two significant developments. One, the unit price through reverse auctions have reached a record low of Rs1.99 per unit. Secondly India installed 1.73 gigawatts (GW) of new solar capacity over the nine months to September 2020, during the same period last year 5.84 GW was installed. We are lagging behind India’s target of 175GW of renewable energy by 2022 from existing 90GW now, a lot of effort has to be done.
While lower tariff will lead to deeper adoption of renewable energy, it is also important to ensure that investing in this sector is economically viable. Non availability of strong local manufacturing to provide key components meant high dependence on imports mainly from China.
Raising import duty is not a long term solution, more incentivization is needed to promote more local manufacturing. Apart from supply side support, a strong incentivization is required for renewable energy through demand-side management. The cost of installing rooftop solar installations still deters the wider adoption of renewable energy. Well targeted financial incentives like lower interest rate for retail consumers mainly home owners would be a much needed push in this direction.
Intensifying KUSUM scheme will aid to solarize irrigation pump sets. As a push towards more localization under the Atmanirbhar Bharat and Make In India, a lot more has to be invested in R&D as the role of technology in the renewable energy sector is huge. Solar microgrids, a result of R&D help in rural electrification and faster transition towards electric vehicles will be R&D oriented. The usage of R&D is becoming stronger day by day and there is a strong consensus that renewable power will become dominant not just in India but all across the world. Providing clean energy at affordable prices must be accorded the highest priority. Incentive provided in this field will enable things to happen.
- Dr. Indrajit Mazumdar