The Union Budget 2023 has enhanced the overall outlay to the power ministry by nearly 58 per cent, a special study by T&D India observes.
According to the detailed budget documents, the total outlay of the power ministry for FY24 is Rs.20,671 crore that is 57.7 per cent higher than the comparable Rs.13,107 crore for FY23 (Revised Estimate or RE),
Much of the outlay for FY24 represents in on the “revenue” side with capital expenditure accounting for a mere Rs.17 crore. In FY23 (RE), capital expenditure for the power ministry stood at Rs.23 crore. It may be mentioned that in FY22, capital expenditure was significantly higher, at Rs.2,827 crore – much of it coming as loans granted to state governments under the erstwhile Integrated Power Development Scheme (IPDS).
The outlay of the power ministry broadly includes expenditure on strengthening of power systems, Central sector schemes and projects, expenditure on autonomous bodies under the ministry, expenditure on Central public sector units, etc.
Allocation to RDSS
An important highlight is the enhanced allocation to the Revamped Distribution Sector Scheme, popularly known as RDSS. The allocation to RDSS for FY24 has more than doubled to Rs.12,701 crore in FY24 from Rs.6,000 crore in FY23 (RE). There appears to be some shortfall in RDSS spending in the ongoing FY23 given that the budgeted allocation was around Rs.7,566 crore.
RDSS, launched in July 2019, has an overall outlay of Rs.3 trillion with government support of around Rs.0.98 trillion (or Rs.98,000 crore) that would be available till FY26. A little of half of the total RDSS outlay is directed towards smart prepaid metering, which is largely being done through the TOTEX model – a combination of OPEX and CAPEX models.
Energy Efficiency Scheme
Detailed budget documents suggest that the Centre, through the power ministry, is working on a new scheme aimed at promoting energy efficiency activities in different sectors of the Indian economy. Revenue expenditure of around Rs.104 crore is anticipated in FY24, under this scheme.
Assistance to CPSUs
Speaking of assistance to Central PSUs under the power ministry, the Union Budget 2023 has allocated Rs.3,931 crore in FY24 as against Rs.2,907 crore in FY23 (RE) – a growth of 35 per cent.
A big component – Rs.1,945 crore — of this assistance is towards Government of India fully serviced bond issue expenditure and interest, on bonds issued by REC Ltd. Another Rs.1,448 crore would be provided as grant to Chenab Valley Power Projects Pvt Ltd – a joint venture between NHPC (equity: 51 per cent) and J&K State Power Development Corporation (49 per cent). This assistance is for CVVPPL’s upcoming Pakal Dul hydropower project in J&K, and is being given under “J&K Prime Minister’s Development Package (PMDP) 2015”. Incidentally, this package, announced in November 2015 and an outlay of over Rs.80,000 crore, aims at financially assisting several infrastructure projects in J&K.
Outlay of Power sector CPSUs
The combined outlay of all Central PSUs in the power ministry is expected to be Rs.60,805 crore in FY24, up 15 per cent from Rs.52,878 crore in FY23 (RE). It is very important to note that this outlay (capital expenditure) by Central PSUs will be financed entirely through internal and extra-budgetary resources (IEBR) with no budgetary allocation. This outlay is therefore not part of Rs.20,671 crore power ministry outlay, discussed earlier in this story.
Power Grid Corporation of India Ltd (PGCIL) is expected to undertake expenditure of Rs.8,800 crore in FY24 – unchanged from that in FY23 (RE). In FY22, capital expenditure incurred by PGCIL was Rs.9,426 crore.
Among Central PSUs in the power ministry, NTPC has the highest outlay of Rs.22,454 crore in FY24, same as that in FY23.
Note: BE = Budget Estimate; RE = Revised Estimate
