CII welcomes levy reduction on captive power generation

The Confederation of Indian Industry (CII) has welcomed the decision of the Rajasthan government to reduce the levy on captive power generation from 25 paise to 20 paise, or 15 paise, depending on the slab.

Terming this as a "positive step" and a "confidence building measure," the CII said that this would help in restoring investor and industry confidence.

It may be recalled that in the Budget, Chief Minister Vasundhara Raje, who also holds finance portfolio, had earlier imposed a 25 paise levy on each unit that was generated by captive power plants.

The CII had opposed the move saying that this step would only help make industry uncompetitive in the state.

While industrialisation had not really taken off in the state, the levy would hamper not only fresh investments, but also affect proposed expenditure in plant expansion and capacity-building.

The CII had also said that this would cause industry in the state to become very uncompetitive as there was no other state in the region that had imposed this cess.

While welcoming the move, the CII also cautioned that to unshackle industry, a complete rollback of this levy would be desirable. The CII also appreciated the removal of the entry tax on coal as this too had a negative impact on captive power units.

The CII mentioned that it would continue to push for the total rollback on the cess on captive power generation.

Laying a blueprint for the power sector, the CII said that to actually tackle inefficiencies in the system and to reign in spiralling transmission and distribution losses, there was need to initiate power sector reforms at the earliest.

Mentioning that the delayed monsoon had already impacted the growth for the state, the CII release mentioned that targeting a sustained growth rate of 7 to 8 per cent, that was being envisaged, was going to become even more challenging.

Appreciating the chief minister's mantra on fiscal discipline, the CII release said that increasing revenue and expenditure gaps had put many states on the brink of financial unsustainability.

The move by the Rajasthan government to keep a tight control on unplanned expenditure was welcome. The increased investment in the social sector was also welcome.