As part of its 2022 Nationally Determined Contribution (NDC) goals, India has committed to a number of ambitious objectives such as reducing GDP emissions intensity by 45% from 2005 levels by 2030, increasing its renewables capacity to 500 GW by 2030 and achieving net zero status by 2070.
Some of the key initiatives for achieving these goals are around energy and transport transition, reversing deforestation and land degradation, reducing the carbon footprint of agriculture, minimising wastage of food and the like. The associated investment has been estimated at more than ₹11 lakh crore per year between 2015 and 2030.
It is therefore encouraging to see Budget 2023-24 call out “Green Growth” as one of the seven priorities for future growth. As has been the case for infrastructure, Government of India (GoI) spending is expected to contribute a major share of this outlay over the years. Some of the key initiatives outlined in the current budget towards this end include:
Transitioning 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 developing energy storage projects with capacity of 4,000 MWH on PPP basis; augmenting the transmission network for evacuating 13 GW renewable energy from Ladakh at an investment of ₹20,700 crore of which GoI will invest ₹8,300 crore; increased adoption of coastal shipping through PPPs supported by VGF to lower costs and the associated carbon footprint.
Facilitate adoption of the LIFE framework to support livelihoods through the Green Credit Programme which will incentivise companies, individuals and local bodies to adopt environment friendly practices;
Encouraging adoption of Circular Economy concepts across multiple sectors through initiatives like the Galvanizing Organic Bio-Agro Resources Dhan (GOBARdhan) scheme which envisages setting up of 500 “waste to wealth” plants at an investment of ₹10,000 crore; financial support for all central and State government agencies for implementing the Vehicle Scrapping Policy which was announced in 2021.
Facilitating land rejuvenation, afforestation and reducing carbon footprint of agriculture by incentivising States to adopt alternative fertilizers and ensure balanced use of chemical fertilizers through the PM-Pranam scheme; supporting 1 crore farmers to adopt natural farming by setting up 10,000 bio-input resource centres as part of a national network for micro-fertilizer and pesticide manufacturing; mangrove afforestation through the MISHTI scheme; land rejuvenation & optimal use of wetlands, enhancing bio-diversity & carbon stock and promoting eco-tourism & income generation through the Amrit Dharovar scheme.
While the above initiatives are clearly steps in the right direction, some specific measures for encouraging private participation in climate financing have not been covered in the current Budget. Representative examples include tax and related regulatory concessions for investors in sovereign green bonds which have just been launched in the country; an initial corpus for expanding carbon markets and for setting up a market liquidity-cum-stabilisation fund for carbon markets; incentives for potential carbon market investors.
However, unlike the past where the Union Budget was cast in stone at the time of announcement, contemporary budgets have been more dynamic with new initiatives being announced and modification in outlays taking place during the year. It remains to be seen whether some of the above measures for incentivising private participation and enabling market-based mechanisms are addressed subsequently.
(The writer is Partner, Deloitte India)