Dr. Arvind Kumar*
High hopes are often pegged at increased budgetary allocations each time as and when a budget is presented and in an eventuality of decreased allocations, the probability of pessimism is bound to loom large and so has been the case with the 2022 budget that makes a good reading with diminished optimism in most of the sectors, particularly the environmental sector that is going to be a rest case for the promises made by PM Modi at COP26. This lacuna can be addressed by allocating additional resources after a mid-year review in the ongoing financial year so that it can be sledding towards climate action.
While tabling the Union Budget of 2022-23 in Lok Sabha recently, the Union Finance Minister in her speech, emphasised the impact of climate change and efforts to mitigate its impact on the economy in the budget. She said that climate action and energy transition are one of the four priorities of this year’s Budget. She also said that the finance ministry was working in accordance with PM Modi’s promises made at COP26 in Glasgow.
At COP26, PM Narendra Modi surprised the world by showing India’s commitment to fighting climate change. He proposed a bold new five-fold strategy or ‘Panch-amrita’, the promises include: India will take its non-fossil energy capacity to 500 GW by 2030; India will meet 50 percent of its energy requirements from renewable energy by 2030; India will reduce the total projected carbon emissions by one billion tonnes from now till 2030; India will reduce the carbon intensity of its economy by less than 45 percent by 2030; India will achieve the target of Net-Zero by the year 2070.
Nirmala Sitharaman presenting the Union Budget 2022 (Source- NDTV)
It was obviously evident that parts of the Budget were developed against India’s commitments from COP26. In her speech, Sitharaman used the terms ‘energy transition’ and ‘climate change’ explicitly and that the low carbon development strategy that PM Modi announced was an important reflection of the government’s strong commitment to sustainable development. She said, “Risks of climate change are strongest negative externalities that affect India and other countries. What is needed is mindful and deliberate utilisation instead of mindless, destructive consumption. The strategy opens huge employment opportunities and will take the country on a sustainable development path. This budget proposes several near-term and long-term plans accordingly.”
As a further commitment towards this, the 2022 Budget facilitates to promote the domestic manufacturing of high efficient solar modules by allocating Rs 19,500 crore for Production Linked Incentive (PLI). This will attract domestic and foreign investors and will encourage many existing and potential manufacturers to set up integrated manufacturing in India. The PLI scheme could be a key catalyst to make India a global manufacturing and R&D hub for solar modules and its associated products. PLIs have works in the past but it depends on technology transfer and access to critical and rare raw earth materials.
The Budget also focused on promoting Electric Vehicles and creating a domestic market for zero emission vehicles. The announcement on a separate policy on battery swapping, interoperability standards and setting up separate zones for charging stations will help to promote EV adoption and increase user confidence. The allocation for the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) India scheme was increased to Rs 2,908 crore for FY 22-23, up from a revised estimate of Rs 800 crore in FY 21-22 is a big step towards promoting zero-emission transport. To reduce carbon emissions and take a step towards carbon neutrality, the Finance Minister announced that the government will issue ‘Sovereign Green Bonds’ to mobilise resources for green infrastructure which will be deployed in public sector projects to reduce the carbon intensity of the economy. This proposal signals the country’s seriousness in pursuing climate action. Green energy and clean mobility systems have immense potential to modernise the country and make Indian industry more inclusive.
In the agriculture sector, the Finance Minister told that the government will promote chemical-free natural farming throughout the country, with a focus on farmers’ lands in 5-km wide corridors along river Ganga, at the first stage.To address the issue of stubble burning and rising pollution, Sitharaman announced that 5-7 % biomass pellets would be co-fired in coal thermal power plants resulting in CO2 savings of 38 million metric tonnes annually. She said, “This will also provide extra income to farmers and job opportunities to locals and help avoid stubble burning in agriculture fields”. The Centre will also introduce policies to promote agroforestry and private forestry to boost green cover and will provide financial support to farmers from SC and ST communities for agro-forestry. The Finance Minister also pushed for the use of digital technologies and the use of drones to propel the growth of the farming sector. A scheme in partnership with the private sector will help to deliver high-tech digital services to the farmers. The scheme aims to channel public-sector research along with private agri-tech players in the agricultural value chain. It proposed to ramp up drone-based technologies in agriculture, digitisation of land records, and spraying of insecticides and nutrients.
In the backdrop of COP26, many were expecting an increment in the allocated budget to combat climate change, but it received less attention.Unfortunately, the budget has allocated Rs 30 crore towards the Climate Change Action Plan and Rs 60 crore towards National Adaptation Fund, with no increase from last year. The Union Environment ministry was allocated Rs 3,030 crore, out of which Rs 460 crore was allocated towards the control of pollution, which is Rs 10 crore less than last year’s Budget. However, the allocation for the National Mission for Green India got an increase to Rs 361.69 crore with the National Afforestation Programme alone being allocated Rs 300 Crore of it. The biggest cut was seen in the Pradhan Mantri Ujjwala Yojana (PMUY) or the LPG subsidy scheme, which was one of the country’s biggest air pollution mitigation programmes. The budget allocated was only Rs 4,000 crore for LPG subsidies as opposed to Rs 12,000 crore allocated last year.
The Budget 2022 sends a strong signal with energy transition and climate action as one of its four pillars. This shows the government’s intent to drive economic growth and employment with sustainability as a core focus. By referring to low carbon development and the government’s strong commitment towards sustainable development and generating employment, the Union Budget sends a strong message. The Budget according to experts did fall short on certain counts. The cut in allocation in LPG subsidies was a blow as it helps the poor and vulnerable sections of society as well as combating air pollution. The proposals for the development of the agricultural sector have been technology-centric rather than focusing on sustainable agricultural systems and practices, which are generally based on cost-effective natural solutions and the principles of the circular economy. There should have been funds allocated towards the resilience of infrastructure and livelihoods against climate risks. India’s 2070 net-zero emissions target at COP26 will require massive investments in climate change adaptation and mitigation programs in years to come to transform the economy into a low carbon one while maintaining economic growth. The road to sustainable development is going to be long and tedious and the Government of India must maintain the momentum towards it through its added budgetary allocations.
*Editor, Focus Global Reporter
