The minister has extended the tax holiday for power projects till 2003.

"This is a positive sign as the gestation period of these projects is large and so far only a few projects have reached implementation stage," said NDIL Director Power Projects, MR Rao.

The guarantee scheme planned for the state electricity board to cover their long standing dues of Rs 10,000 crore will certainly help the SEBs, said Jayraj Purendare of Arthur Andersen.

"Unlocking these dues will release funds for vital activities," PK Choudhury, managing director of Icrasaid. Though the minister has not spelt out the rationaliation planned in Section 10 (23) G, this is aimed at offering the maximum benefit to the power sector, added Purendare.

The decision of bringing the IDFC (Infrastructure Development Finance Corporation) at par with financial institutions will also provide financial support to the government and private projects. The exact role of the corporation will be seen only subsequently as industry was wondering if IDFC could share the burden of guarantee on payments. IDFC has already tied up its paid up equity capital of Rs 1,000 crore which also include overeas funds.

The government has already allowed 100 per cent equity in power projects. The budget has not provided any special sops to lure much-needed overseas finance, sources said. However, it has announced sops to attract funds from non-resident Indians and this will benefit the power sector as it already offers incentives on investments, said Standard Chartered CEO, Martin Fish.

Addressing thecrutial issues of allocation of subsidy to some sections, especially agriculture, which is a major hurdle in development of the sector, the minister has reiterated the formation of centre and state regulatory authorities. The industry wants the burden of this subsidy not to be borne by industry but government coffers.

"Appointment of a monitoring officer may not solve the problem," said Rajagopal. The ministry of power alreay has an investment promotion cell to undertake the same task but it has not achieved any satisfactory results, he added.

Boost to the infrastructure sector in general, especially as regards roads, ports and housing and related industry such as steel and cement will further increase the demand of power and encourage investment in the sector, said AK Srivastava, Chief Operating Officer Essar Power.

According to an analyst, the finance minister has identified major hurdles like lack of transparency and red tapism and has announced streamlining and acceleration of the clearance process.However, no effective solution has been announed. "These impedements had been recognised some years ago and there has been a continous dialogue on the issue but little has been achieved," he added.