Explained: What The Union Budget Says On Environment And Climate Change

Finance Minister Nirmala Sitharaman presented the Union Budget for the year on February 1 . Because of its efforts to encourage business activity and infrastructural development, it has been dubbed the "booster budget."

Climate action, coupled with Prime Minister Gati Shakti's infrastructure master plan, inclusive development, and energy transformation, were highlighted as cornerstones supporting the Budget.

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Many environmental jargons such as climate change, net-zero, energy transition, carbon intensity, green bonds, circular economy, battery swapping, infrastructure status, and energy storage systems were used regularly for the first time in any Union Budget.

As a result, the budget for 2022 can be considered a "green budget." It's also evident in this year's Economic Survey, which includes an entire chapter on India's Sustainable Development Goals (SDGs) implementation, forest cover, plastic waste management, groundwater resources, river systems, air pollution management, and climate change adaptation.

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Climate change, according to the Overseas Development Institute, could cause India to lose 3-10 per cent of its GDP per year by 2100.

Furthermore, taking into account India's three paper goals, which were submitted to the United Nations Framework Convention on Climate Change (UNFCCC) in the form of its Nationally Determined Contribution: to reduce the emissions intensity of its economy; to increase the non-fossil-based component of electric power; and to expand the carbon sink from forest and tree cover. Climate finance was a must-have item in the budget.

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However, according to the most recent data, central government subsidies distributed through the National Adaptation Fund on Climate Change (NAFCC) have been continuously declining for the past five years. According to data provided in Parliament on Monday by Minister of State for Finance Pankaj Chaudhary, grants awarded under the NAFCC plummeted from Rs 115.36 crore in 2017-18 to Rs 42.94 crore in 2020-21, and Rs 27.76 crore (till December 2021) in the current year.

NAFCC is one of the Centre's two major programmes, along with the Climate Change Action Program. Between 2015 and 2019, the NAFCC approved 30 projects with a total budget of Rs. 847.5 crore.

Budget on climate financing

In sectors such as climate change, the Union Budget 2022-23 emphasised sovereign green bonds and thematic funds for blended finance. Green bonds, which will be issued by the Reserve Bank of India, will be part of the government's broader borrowing programme and will be used to fund initiatives that will reduce carbon emissions. Officials from the Finance Ministry plan to generate a "substantial sum" using these bonds this year. The government will lay out a plan for how the money earned through these bonds will be put to good use.

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Blended funding will be provided by a number of institutions, including NABARD, with government and private sector contributions.

¡°India has seen an increasing number of issuances in the overseas green bond market. India is currently ranked 2nd (after China) among the emerging market economies in Green Bonds issuance. Till date, there have been 11 issuances of green debt securities, under SEBI guidelines, by private and public sector entities in India amounting to Rs 3,099 crore,¡± Chaudhary said.

Is it really a green budget?

In the recent past, there's been a huge protest against many infrastructural projects for failing to accurately gauge environmental consequences and other utility-scale renewable energy infrastructure.

Many linear infrastructure projects continue to face public opposition due to their environmental and social consequences, such as the proposed Bullet train in Gujarat and the proposed Silver Line in Kerala, as well as proposed highway expansions in Goa affecting the Mollem National Park and in Karnataka affecting the Bandipur Tiger Reserve.

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S Gopikrishna Warrier, a senior environmental journalist, writes in Mongabay that "it is in this context that the Budget should not be seen in isolation of the government¡¯s priorities and actions in the past years. In the process of increasing the ease of doing business, the NDA government has been diluting environmental regulations. The process for assessing the environmental impact of a project in itself stands diluted."

It is no secret that forests have usually been witnessing the collateral damage in many infrastructure projects. The Economic Survey, which quotes the India State of Forest Report 2021 in detail, states: "much of India¡¯s increase in forest cover during 2011-¡¯21 is attributed to enhancement in very dense forest cover, which rose by approximately 20% during the period.

Open forest cover also improved by seven per cent during the period. Going forward, there is a need to further improve forest and tree cover. Social forestry could also play a significant role in this regard."

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However, data from the current India State of Forest Report 2021 analysed by Mongabay-India shows that more forests have thinned out in recent years, and that more plantations are being portrayed as forests.

As a result, while the central government may implement its energy transition plan as part of its infrastructure drive, Warrier argues, the green language of the Budget is more likely to result in a net loss for the environment.

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