The Budgets in the last three years have been ‘acknowledging’ the risks posed by climate change to India’s macroeconomic stability. The current Budget 2022-23 was no different. But words are not the heroes that get us to net-zero. And a glance at the budgetary allocations for climate actions does not inspire confidence in India’s plan for achieving the target of net zero emissions by 2070. Let us parse this, based on what was announced for different sectors.

Clean energy

At COP26 Summit in November 2021, the government announced a rapid deployment of renewable energy over 2021-30. Hence, it was expected that a significant amount of capital would be allocated to accelerate renewable projects. It came as a disappointment for the clean energy sector as there is no such announcement made in this year’s Budget. While the proposed allocation of ₹19,500 crore to facilitate domestic solar manufacturing is a welcome move, it stems more from the desire to not rely on international markets — particularly China — for solar PV modules, when the country has an ambition of 280 GW of solar capacity deployment in the next few years.

Also, the use of 5-7 per cent biomass pellets for co-firing in thermal power plants to avoid stubble burning in agriculture fields and provide “extra income and job opportunities” to farmers sounds ambitious. While the government has acknowledged blending of fuel as a priority and proposed an additional differential excise duty of ₹2 a litre on unblended fuel, it has not announced any new provision for use of biofuels.

Mobility

Similarly, the Budget outlines a number of clean and sustainable mobility initiatives and a battery swapping policy for electric vehicles but falls short of committing any budgetary allocation for the same. The introduction of 400 new-generation Vande Bharat Trains, innovative ways of financing and implementation for building metro systems, and development of ropeways under Parvatmala scheme as a preferred ecologically sustainable alternative to conventional roads in difficult hilly areas are new initiatives that will play an important role in India’s transit-oriented development.

It is surprising, though, that the Budget did not make any mention of new initiatives to tackle the burgeoning problem of air and water pollution. It does, however, propose to deploy clean tech and governance solutions, special mobility zones with zero fossil-fuel policy, and electric vehicles to promote the use of public transport in urban areas.

Financing

The government has proposed to issue sovereign Green Bonds for mobilising resources for green infrastructure, which is a giant step to mobilise long-term capital from domestic and international investors for climate mitigation and adaptation projects.

The proceeds from sovereign green bonds can be used in climate mitigation or adaptation projects, which do not attract private capital. It has also proposed to facilitate services for global capital for sustainable and climate finance in the country through GIFT city.

In the same spirit, it could have used this opportunity to position the National Bank for Financing Infrastructure and Development (NaBFID) as a lender for the development of climate-resilient and sustainable infrastructure.

Lack of clarity

This year, India has taken a leap forward by preparing action plans for sectors like electronic waste, end-of-life vehicles, used oil waste, and toxic and hazardous industrial waste. There is, however, little clarity on how the government proposes to address cross-cutting issues of infrastructure, technology upgradation, and financing through regulation.

For energy management, the Budget has announced the promotion of energy efficiency and savings measures. Without making any budgetary outlays, it has called upon Energy Service Companies (ESCO) to facilitate capacity building and awareness for an energy audit for large commercial buildings. It remains to be seen if this would pave the way for green building investments in India.

Agriculture continues to remain a key focus area for the government, but there is not enough emphasis on sustainable agriculture, which is essential for India’s food security and livelihood. The Budget proposes the promotion of chemical-free natural farming but does not outline any concrete policy action besides bringing sustainable agriculture practice in the syllabi of agricultural universities and legislative changes to promote agroforestry and private forestry.

Jena is Regional Climate Finance Adviser, The Commonwealth Secretariat, and Jain is Senior Analyst - Climate Finance, Climate Policy Initiative

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