Tomorrow, all of us will be glued to the TV to watch the budget announcements. No doubt it will be a populist budget as we are heading to General Elections in a few months. However, the net-zero target by 2070 may force the Union Finance Minister Nirmala Sitharaman to allocate funds for India’s transition to a sustainable future in this interim budget.
India is pushing its energy transition (renewable energy) narrative. However, with the buoyant growth in the economy, the country is scaling its capacity addition in power generation which is raising its carbon footprint. The country’s reliance on RE is set to jump multi-fold with the target of 500 GW by 2030. Additionally, the production of nuclear power is increasing. In this regard, we anticipate a few policy adjustments to put India on a decarbonization path. Other emerging energy sources like hydrogen, offshore wind, and energy storage will attract attention. Modernization of grids, smart meters, green bonds, blue bonds and carbon markets are also in focus.
I have a gut feeling that we will see some green shoots. This is essential because this is India’s first budget after the G20 Presidency, during which we focused on “Lifestyle for Environment” (LiFE). I expect a reflection of LiFE in the budget with more measures for integration. This could be in the form of measures to attract investments in sustainable lifestyles, green education, and awareness campaigns that could empower citizens to adopt environmentally conscious practices.
Challenges:
Expectations are high. However, fiscal constraints present a challenge. The government needs to strike a balance between green ambitions and fiscal prudence. The finance ministry must ensure effective allocation and utilization of funds, address land acquisition hurdles for renewables projects, and create a conducive policy environment for private sector participation.
It is crucial to have a dynamic green finance framework. The development of dedicated green finance instruments like green bonds or climate-focused investment funds can attract private investments toward green initiatives. Leveraging innovative financing mechanisms, public-private partnerships, and carbon credits can bridge the gap.
The much-talked-about national carbon market may get operational. This is the right step towards achieving India’s climate goals. This will no doubt encourage emission reduction efforts across industries as it gives financial incentives.
Continued actions:
We may see more focus on Green Technology Development with increased R&D funding. Green hydrogen, battery storage, and carbon capture and storage (CCS) can propel India’s technological leadership in climate action.
There will undoubtedly be a mention of matching the industry demand for a skilled workforce in the upcoming budget. Investing in skilling and reskilling programs for green jobs would prepare the workforce which in turn will help the country transition to a green economy. In other words, it would guarantee a smooth and inclusive shift towards sustainable practices.
Greening the agri segment:
Agriculture, a major emitter, needs a green makeover. I expect budget allocation to support organic farming, natural farming, and precision agriculture technologies. In addition, water conservation technologies, irrigation efficiency improvements, and sustainable water management practices are also crucial for greening the agri sector. Focus on agri/rural waste management could further green the agricultural sector.
The RE push:
Scaling up renewable energy: I anticipate that capital allocations for renewable energy (RE) projects will increase significantly. They are likely to surpass the Rs. 35,000 crores announced in the Budget 2023. This could fuel solar, wind, and other renewable energy infrastructure development. This boost could be directed towards infrastructure development – green transmission corridors, smart meters, and R&D in emerging technologies like offshore wind and green hydrogen.
Expanding the Production-Linked Incentive (PLI) scheme for electrolyzer manufacturing would boost green hydrogen production, a vital element in India’s clean energy puzzle. This would incentivize domestic production of crucial components for green hydrogen generation.
Green mobility: More budgetary support is expected for the production of electric vehicles (EVs), the development of charging infrastructure, and battery storage solutions. This can involve the extension and expansion of existing EV purchase and production subsidies and tax breaks.
Sustainable public transportation may also get more focus. Transport projects like metro rail expansion and electric buses are the need of the hour.
Tomorrow’s budget has the potential to be a defining moment for India’s green journey. The government can put India on a fast track towards building a sustainable future. All eyes will be on the Finance Minister’s speech as we wait for her to set the path towards a greener tomorrow.