The proposal to double cess on coal will hurt the government’s efforts to revive the ailing power distribution companies, an industry expert said.
The government proposes to mop up Rs 26,148 crore in the ensuing financial year through the cess. Finance Minister Arun Jaitley proposed to double the cess on coal; lignite and peat to Rs 400 per tonne from the present Rs 200 per tonne.
The cess will raise prices of domestic coal, highlighting India’s commitment to tackle climate change. The clean energy cess will be renamed as clean environment cess.
“This definitely demonstrates India’s efforts towards fulfilling commitment made in COP21. However, in the immediate future it puts huge stress on distribution company finances as they would struggle to pass this in consumer tariff. Government could have waited for the UDAY scheme to fully take effect” Said Debasish Mishra, partner in consulting firm Deloitte Touche Tohmatsu India LLP.
