Asia Press Agency

Tag: Viability Gap Funding

  • Budget Allocation for India’s Udan Scheme Slashed to ₹502 Crore

    Budget Allocation for India’s Udan Scheme Slashed to ₹502 Crore

    The Udan scheme, designed to boost regional air connectivity in India, is set to receive ₹502 crore in the FY25 budget, signaling a decrease from the revised estimate of ₹850 crore in FY24 and the initial estimate of ₹1,244 crore. The allocated funds will play a crucial role in reviving 22 airports, initiating 124 air routes, and providing viability gap funding for enhancing connectivity in the north-eastern region.

     

    The FY25 budget for the civil aviation ministry reflects an allocation of ₹2300 crore, representing a reduction from the revised estimate of ₹2922.12 crore for FY24 and the initial estimate of ₹3113.36 crore. While the overall budget has seen a decrease, the focus on Udan signifies the government’s ongoing commitment to fostering regional air connectivity and promoting the growth of the aviation sector.

     

    A significant portion of the budget, amounting to ₹1158.79 crore, has been earmarked for Air India Asset Holding Ltd (AIAHL), a special purpose vehicle holding various assets previously owned by Air India during its government ownership. This allocation is intended for servicing the loan transferred to AIAHL as part of Air India’s financial restructuring. The FY24 budget had initially proposed ₹1144.49 crore for AIAHL, which was later revised to ₹713.92 crore.

     

    In FY24, the government had outlined plans to revive an additional 50 airports, heliports, water aerodromes, and advanced landing grounds under Udan, aiming to enhance regional connectivity. The FY25 budget reflects a continuation of this commitment, with the allocation of ₹1,000 crore sanctioned for three years, starting from April 2023 until March 2026. This funding will support the revival and development of unserved and underserved airports, helipads, water aerodromes, and advanced landing grounds, among other critical infrastructure.

     

    The government has identified 33 airports, heliports, and other landing grounds for tentative revival and development under the third phase of Udan. In July, ₹410 crore was sanctioned for the development of 15 aerodromes, with plans to identify additional heliports and water aerodromes through ongoing and future rounds of bidding under the Udan framework.

     

    The reduced budget allocation for Udan in FY25 raises questions about the potential impact on the pace and scale of regional air connectivity initiatives. However, the government’s commitment to allocating funds for the development of critical aviation infrastructure indicates a continued focus on fostering connectivity, especially in underserved regions.

     

    While the budget for Udan in FY25 has witnessed a reduction, the overall budgetary allocation for the civil aviation ministry underscores the government’s dedication to advancing regional air connectivity. The coming years will reveal the effectiveness of these budgetary measures in achieving the objectives of Udan and furthering the growth of India’s aviation industry.

  • ₹6,000-Crore Incentive Scheme for Coal Gasification Projects

    ₹6,000-Crore Incentive Scheme for Coal Gasification Projects

    India’s Union Cabinet is poised to consider a ₹6,000-crore incentive scheme designed to promote coal gasification projects. The scheme, which has been finalized and awaits cabinet approval, aims to provide incentives for various types of gasification initiatives, including those led by public sector units (PSUs), private sector companies, and pilot projects.

     

    Under the proposed scheme:

    • PSU-Led Gasification Projects: Viability gap funding (VGF) of up to ₹1,000 crore or 10% of the expenditure for each project is likely to be provided. This category includes joint venture projects involving Coal India, GAIL, and BHEL.
    • Private Sector Projects: Government support would be extended to private sector projects, with incentives of up to ₹600 crore or 15% of the overall expenditure per project.
    • Pilot Projects: Support for five pilot projects focused on technology development would be up to ₹100 crore per project or up to 20% of the project cost.

     

    The scheme also includes provisions for the reimbursement of Goods and Services Tax (GST) on coal used for gasification, which may be applicable for a period of 10 years.

     

    Coal gasification is a process that converts coal into fuel gas, offering a cleaner alternative to traditional coal burning. The resulting gas can be used to produce various gaseous fuels, including hydrogen, methane, methanol, and ethanol. However, the high ash content in Indian coal has been a technical barrier to widespread coal gasification.

     

    As India strives to achieve net-zero carbon emissions by 2070, the government has set ambitious goals for gasifying coal, aiming to reach 100 million tonnes of gasified coal by 2030. The increased adoption of renewables in the power sector is expected to reduce the use of coal for thermal power generation, making alternative uses of coal more important.

     

    The National Coal Gasification Mission, launched in November 2021, seeks to assess the gasification potential of coalfields and develop indigenous technologies for gasifying coal with varying ash content. The mission also proposed tax-related relaxations, including a waiver of GST compensation cess, a reduction in additional cess and duties, and a tax holiday of 15 years for coal gasification projects.

     

    Coal Minister Pralhad Joshi indicated in July that the scheme had been approved by the Expenditure Finance Committee (ECF) and would be presented to the cabinet for approval. The scheme aligns with India’s efforts to transition to cleaner energy sources and reduce its reliance on conventional coal-based power generation.