The Budget proposal to double allocation for power development would accelerate generation capacity and attract fresh investments into the sector.
Finance minister Pranab Mukherjee raised the allocation for the sector to Rs 5,130 crore, from the previous Rs 2,130 crore. With this, the government targets to add over 78,000 megawatts of capacity by 2012.
Further, other proposals such as policy reform for fuel linkages and for lowering generation cost for thermal, would ensure timely execution of projects. Thermal project constitute 75% of energy generation.
Shortages in coal supply have already resulted in a generation loss of 10.7 billion units of power at various thermal power projects in the country during April-December 2009.
The government also has plans to allocate more captive coal mines for the power companies. NTPC, Indias largest power generator, has said it would be able to achieve its FY10 generation targets.
Private players such as Tata Power, Reliance Power, JSW Energy, Essar Power, Adani Power are also expected to develop coal mine linkages for their proposed generation projects.
The tax relief on import of equipment used for solar and wind energy would also attract fresh investments into the sector. The Budget proposes to spend Rs 1,000 crore for renewable energy and a separate fund to promote clean energy.
India plans to add 20,000 MW of solar energy by 2022.