Budget 2012: Banks should be allowed to lend more to power sector, says Sumant Sinha, Renew Wind Power
Do you anticipate some serious policy push?
I hope it is going to be a game changer. A lot depends upon what happens between now and March 15th from a political standpoint. A lot of that cannot be factored into the actual budget equations. I would have to assume that a lot of the political developments will not actually feed into the budget. It will probably be a tick in the box.
Do you not think we need to fix the fisc and that needs to be done this budget because we are precariously positioned, we cannot have a populist budget, it has to be a prudent budget…
The government has to do something about getting the fiscal deficit under control. The target last year was about 4.5%. It is going to probably end up this year, at anything between 5.5 and 6%. There may be slippages on a number of different areas, both on the spending side as well as on the revenue side.
That is a level of deficit that we as a country just cannot afford. Out total debt to GDP numbers are ticking up because the government is borrowing $20 billion more this year than it had originally targeted for. That has a crowding out impact for investment. Getting the fiscal deficit under control has to be the Finance Minister’s No. 1 priority this year.
The power sector has been looked at as one space that has crippled a large number of other sectors. What is your expectation on the power sector in the budget?
The power sector is in a total mess right now and we need to have a number of changes that take place. Unfortunately power is not just essentially a government responsibility, it is also the responsibility of states as it is a concurrent sector. A lot of things fall between the cracks at both ends.
On the conventional power side, resolving the Coal India issues is an important issue. Improving the general financial health is important as well. That hopefully will began to happen now that the CRC has mandated the state electricity regulatory commission start increasing tariffs.
Banks have to be allowed to lend a little bit more to the power sector. Within the power sector is the issue of renewable energy and that is an area that the government can also push in terms of growth to drive the sector.
What do you think UPA’s policy is on empowering the common man and allowing more interaction between corporates and society to get what would be the best to both works?
No, I do not think the finance minister has a choice. Those programmes have to be financed because as you observed they are very fundamental to the UPA’s core philosophy around spending for certain sections of society.
As far as corporate India is concerned, we do not really have any issue with that per se because clearly we have to make sure that the malnourished are fed and people are provided education as they should. The issue is only around utilisation of that money.
If you are spending Rs 100 and only Rs 20 are going into the pockets or into the final end use, then that is a problem. The government needs to give better clarity and transparency on the way this money is being spent without needlessly getting the allocations to keep going up. Improve the administrative machinery, that is where the concern lies.
Are we getting too high on expectations and we are likely to see what would be under-promised budget, an underperforming budget?
This government has successfully been able to drive expectations from the budget lower year on year. I do not think that expectations are that high any longer. A lot of things can be done through the course of the year, they do not get done means that the budgets ends up being the policy document of the government where you finally hope that something will come out and that is the expectation this year as well.