Arindam Guha
As part of its 2022 Nationally Determined Contribution (NDC) targets, India has committed to several ambitious objectives such as reducing the intensity of GDP by 45% from 2005 levels by 2030. To increase its renewable capacity to 500 GW and achieve net zero status by 2070.
Some of the major initiatives to achieve these goals are energy and transportation transition, reversing deforestation and land degradation, reducing the carbon footprint of agriculture, reducing food waste, and so on. The related investments are estimated to exceed ₹11 lakh crore per year between 2015 and 2030.
It is therefore encouraging to see the Budget 2023-24 listing “green growth” as one of the seven priorities for future growth. As has been the case with infrastructure, Government of India (GoI) spending is expected to contribute a major portion of this outlay over the years. Some of the major initiatives mentioned in the current budget in this direction include:
transition to renewables and low carbon intensity through initiatives such as the National Green Hydrogen Mission (₹19,700 crore); Implementation of priority capital projects for energy transition and security by the Ministry of Petroleum and Natural Gas at an outlay of ₹35,000 crore; Viability Gap Funding (VGF) for development of energy storage projects with a capacity of 4,000 MWH on PPP basis; enhancing the transmission network to draw 13 GW of renewable energy from Ladakh at an investment of ₹20,700 crore, of which the Government of India will invest ₹8,300 crore; Increased adoption of coastal shipping through PPP supported by VGF for lower cost and associated carbon footprint.
Facilitate adoption of LIFE framework to support livelihoods through Green Credit Program that will encourage companies, individuals and local bodies to adopt eco-friendly practices;
encouraging the adoption of circular economy concepts in several sectors through initiatives such as the Galvanizing Organic Bio-Agro Resources Dhan (Gobardhan) scheme, which envisages setting up 500 “waste to wealth” plants at an investment of ₹10,000 crore; Financial assistance to all central and state government agencies to implement the vehicle scrapping policy announced in 2021.
Land rejuvenation, afforestation and reducing carbon footprint of agriculture by encouraging states to adopt alternative fertilizers and ensure balanced use of chemical fertilizers through PM-PRANAM scheme; supporting 1 crore farmers to adopt natural farming by setting up 10,000 Bio-input Resource Centers as part of a national network for manufacturing micro-fertilizers and pesticides; mangrove afforestation through the Mishti scheme; Land rejuvenation and optimum use of wetlands, enhancing bio-diversity and carbon stock and promoting eco-tourism and income generation through Amrit Dharovar Yojana.
While the above initiatives are clearly steps in the right direction, some specific measures to encourage private participation in climate finance have not been included in the current budget. Representative examples include tax and related regulatory concessions for investors in sovereign green bonds that have just been launched in the country; an initial fund to expand carbon markets and set up a market liquidity-cum-stabilization fund for carbon markets; Incentives for potential carbon market investors.
However, unlike in the past where the Union Budget was set in stone at the time of announcement, the contemporary budget has been more dynamic with new initiatives being announced and outlay revisions taking place during the course of the year. It remains to be seen whether some of the above measures are subsequently addressed to encourage private participation and enable market-based mechanisms.
(The author is a partner at Deloitte India)