India’s budget 2022-23 gives the green light for a green economy

Abhimanini Singh Sawhney

The Union Budget 2022-23, presented Feb 1 to Parliament by Finance Minister Nirmala Sitharaman, has several provisions to fight climate change and promote a green economy.

Following the prime minister’s pledge at the COP26 summit in Glasgow, Scotland, Nov 2021 to make India a low carbon-emission country, the budget carries the themes of sustainability, green economy, energy transition and climate change throughout.

Apart from creating more green inputs into the economy, the finance minister has emphasized the need for “mindful utilization rather than mindless consumption” of resources while the allocation of funds to different institutions and the increase/decrease in funding suggest the direction in which the government wants development to proceed.

The budget tackles problems associated with climate change in three main ways – promotion of alternative energy sources, creation of new opportunities in the sector, and innovative mobilization of funds for the green transition.

To promote alternative energy sources, Rs3,300 crore (a little over US$441 million) have been allocated to create solar energy installations by 2030 with the aim of building 280 GW of solar power capacity.

The budget has also outlined the use of biomass pellets to reduce carbon emissions. It makes provision for energy storage to ensure that renewable energy can be feasibly employed. These measures and emphasis on energy will be useful when the draft Energy Conservation (Amendment) Bill 2022 is tabled later in the budget session of Parliament.

There is a marked emphasis on electric vehicles (EVs). This comes not only through the institution of a battery-swapping policy that will make it significantly easier for the public to adopt the use of EVs but also through a boost in funding.

The new budgetary allocations include a massive hike in support for the EV scheme – from Rs800 crore (about $106 million) in financial year 2021-22 to Rs2,908 crore (nearly $387 million) in the next financial year – alongside an allocation for the productivity-linked incentive (PLI) scheme that will facilitate cell manufacturing to bring more batteries into circulation.

The budget also holds the promise of immense opportunities for entrepreneurs and existing organizations. Given that the emphasis on the green economy goes hand in hand with an emphasis on infrastructure development, several new areas are opening up for businesses providing sustainable services. These include e-mobility, new interest in geospatial mapping and technologies, adoption of EVs in public transport, creation of fossil fuel-free zones where other modes of transport will need to be used, and the semiconductor ecosystem.

The budget does not only provide avenues for more players, but also includes new modes of financing. This has been done through several means to mobilize capital for financing these initiatives. Examples include the issuance of sovereign green bonds to mobilize finance for public infrastructure projects, the promotion of blended financing for projects requiring a 20% public share, a fund for agricultural and rural startups that will also have blended capital, and public-private partnerships for scaling up metro systems.

While the exact allocations have not been determined yet, these measures promise to reduce governmental presence and create several openings for private players.

Apart from these measures, the environment ministry’s ‘Parivesh’ portal has been streamlined – a long-awaited measure that was advocated by the Centre for Science and Environment – to make it easier to facilitate business and business-oriented tasks. A host of other decarbonization measures are in the works, which should help fulfil the PM’s agenda of green measures creating green jobs.