Green Growth Ranks High in Union Budget 2023-24
Kochi: Green found prominence in the Union Budget 2023-24 that finance minister Nirmala Sitaraman presented on Wednesday, January 31, in parliament. Green growth – from green credits to green energy to green mobility to green farming – was among the seven main priorities that made it to the Budget this year.
At the same time, the Budget also envisions developments that would not qualify as green growth, such as constructing 50 additional airports, and identifying 100 projects to develop last-mile connectivity for sectors such as coal and ports. Moreover, there are no budgetary allocations for crucial projects such as the National Climate Change Action Plan, the National Adaptation Plan and the National Mission on Himalayan Studies. This comes at a time when Joshimath and several other towns in the state of Uttarakhand in the Himalaya are facing land displacement.
Experts have welcomed the focus on green growth. However, India must ensure that financial support is directed towards low-carbon technologies and identify areas of environmental degradation and the areas of the economy on which this has the greatest impact and take steps to address them, they said.
Green, green, green
Green growth is among the four opportunities that can be “transformative during Amrit Kaal”, said Sitaraman, as she read out the Union Budget 2023-24.
“We are implementing many programmes for green fuel, green energy, green farming, green mobility, green buildings, and green equipment, and policies for efficient use of energy across various economic sectors,” Sitaraman said. “These green growth efforts help in reducing carbon intensity of the economy and provides for large-scale green job opportunities.”
Green growth is one of the seven priorities or saptarishi to guide India into Amrit Kaal, per Sitaraman. The prime minister’s vision of “LiFE”, or Lifestyle for Environment, will move the country toward an “environmentally conscious lifestyle”, she said. “India is moving forward firmly for the panchamrit and net-zero carbon emission by 2070 to usher in green industrial and economic transition.”
A Green Credit programme to “encourage behavioural change” will be notified under the Environment (Protection) Act, she added. “This will incentivise environmentally sustainable and responsive actions by companies, individuals and local bodies, and help mobilise additional resources for such activities.”
“The government clearly identifies green growth as one of the pillars of development, announcing support measures for storage and renewable energy evacuation infrastructure. This is a welcome move as India tries to rapidly increase the share of renewables in the grid,” said Balasubramanian Viswanathan, policy advisor, International Institute for Sustainable Development (IISD). “The minister of finance also pledged Rs 35,000 crore in support for net zero and energy transition objectives, although the details of the plan are yet to be seen.”
The budget allocation for the Ministry of Environment, Forest and Climate Change increased from a revised estimate of Rs 2,478 crore in the last budget to Rs 3,079.4 crore this year. A separate budget has been allocated for the National Mission on Natural Farming, at Rs 459 crore. The budget for controlling pollution increased from a revised estimate of Rs 600 crore last year to Rs 756 crore in the latest budget.
The budget for the Ministry of New and Renewable Energy has also increased this year – by more than Rs 3,000 crore. It rose from a budget estimate of Rs 6,900 crore (and a revised estimate of Rs 7,033 crore) last year to Rs 10, 222 crore in the Union Budget 2023-24. The budget of solar energy central sector schemes has now increased from Rs 185 crore in the last fiscal to Rs 361 crore, as per the latest budget.
“The recently launched National Green Hydrogen Mission, with an outlay of Rs 19,700 crore, will facilitate the transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports, and make the country assume technology and market leadership in this sunrise sector,” Sitaraman said. “Our target is to reach an annual production of 5 MMT by 2030.”
To further green mobility, the import of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in electric vehicles will be exempted from customs duties.
To steer the economy on the sustainable development path, funding has also been initiated for Battery Energy Storage Systems: a capacity of 4,000 MWH will be supported with Viability Gap Funding (VGF), announced Sitaraman. “A detailed framework for Pumped Storage Projects will also be formulated,” she said.
The VGF support and greater thrust on pumped hydro are critical to helping India move towards meeting the Energy Storage Obligation targets, said Rishabh Jain, senior programme lead, Council on Energy, Environment and Water (CEEW).
“The VGF support should however be leveraged to increase our understanding of the technology and application and should not be considered as a continuous tool for support,” Jain said. “Further, the exemption of customs duty for capital goods and machinery for lithium-ion battery manufacturing will reduce the final prices of batteries and make electric vehicles more affordable for consumers. CEEW Analysis suggests that the key equipment for battery cell manufacturing is imported and their share is between 65-75% of the overall infrastructure costs. Going forward, the government must aim to acquire critical minerals from overseas and build the capability to process them, the analysis said.
More green moves for sustainability
The finance minister announced a new project, ‘Mangrove Initiative for Shoreline Habitats & Tangible Incomes’ or MISHTI, which will involve planting mangroves along the coastline and on salt pan lands, wherever feasible, through convergence between MGNREGA, CAMPA Fund and other sources. ‘Amrit Dharohar’, another new scheme, will be implemented over the next three years to “encourage optimal use of wetlands, and enhance biodiversity, carbon stock, eco-tourism opportunities and income generation for local communities”.
States and cities will be encouraged to undertake urban planning reforms and actions to transform cities into ‘sustainable cities of tomorrow’, Sitaraman said. “This means efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all.”
Three centres of excellence for Artificial Intelligence will be set up in top educational institutions and leading industry players will “partner in conducting interdisciplinary research, develop cutting-edge applications and scalable problem solutions in the areas of agriculture, health, and sustainable cities”, she added.
Apart from enabling mechanical desludging of septic tanks and sewers in cities and towns to transition from “manhole to machine-hole mode”, an enhanced focus will also be provided for the “scientific management of dry and wet waste”, the finance minister said. Plans are also on the cards for 500 new ‘waste to wealth’ plants under the GOBARdhan (Galvanising Organic Bio-Agro Resources Dhan) scheme to promote a circular economy. These will include 200 compressed biogas (CBG) plants, including 75 plants in urban areas, and 300 community or cluster-based plants at a total investment of Rs 10,000 crore.
In the drought-prone central region of Karnataka, central assistance of Rs 5,300 crore will be given to Upper Bhadra Project to provide sustainable micro irrigation and filling up of surface tanks for drinking water. The state is set to have an assembly election in the first half of this year.
The government would give one of the Indian Institutes of Technology a research and development grant to encourage the indigenous development and production of lab-grown diamonds, which is a “technology-and innovation-driven emerging sector with high employment potential”, Sitaraman said. These environment-friendly diamonds have the same optical and chemical properties as natural diamonds, she said.
Infra push, again
Yet at the same time, more infrastructure is also on the cards – infrastructure that may not really promote a green economy. For instance, Sitaraman said that the government has identified 100 “critical transport infrastructure projects” for last and first-mile connectivity for sectors including ports, coal, steel and fertilizers. These will be taken up on priority with an investment of Rs 75,000 crore, of which Rs 15,000 crore will come from private sources. Fifty additional airports, heliports, water aerodromes and advance landing grounds will be revived for improving regional air connectivity, she said.
Upon inspection of the petroleum ministry’s budget, support of Rs 30,000 crore (equivalent to the Rs 35,000 crore in support for net zero and energy transition objectives) as capital support for oil-marketing companies (OMCs) and Rs 5,000 crore for strategic petroleum reserves were found, said Viswanathan of the IISD. “While controlling energy prices and ensuring energy security is critical, India must ensure that financial support is directed towards low carbon technologies.”
To enhance ease of doing business, more than 39,000 compliances have been reduced and more than 3,400 legal provisions have been decriminalised, Sitaraman said in her Budget speech. Experts have pointed out how improving “ease of doing business” has been detrimental to the environment due to dilutions in environmental law that make it easier for businesses to be implemented.
“It is laudable that the green growth framework used by the honourable finance minister will guide investments in renewable energy, energy efficiency, and sustainable transportation,” said Anjal Prakash, research director, Bharti Institute of Public Policy, Indian School of Business. “However, we need to identify the areas of environmental degradation and areas of the economy where environmental degradation has the greatest impact and take steps to address them. The economic survey 2023, unfortunately, didn’t have enough analysis on this front that could have informed the green budget.”
Several crucial programmes – such as the Climate Change Action Plan, National Adaptation Fund and the National Mission on Himalayan Studies – found no allocation in this year’s budget. Last year’s budget earmarked Rs 30 crore, 60 crore and 48 crore respectively for these programmes. But even this was inadequate, writer and activist Nityanand Jayaraman of the Vettiver Collective told The Wire Science last year.
The lack of funds for the National Mission on Himalayan Studies comes at a time when land displacement has been a huge concern in Himalayan hill towns such as Joshimath.
The Climate Resilient Agriculture Initiative, a central sector scheme under the Ministry of Agriculture and Farmers’ Welfare that was allocated funds of Rs 40 crore in the last fiscal year, has no budgetary allocation this time.