Decoding India's environmental budget trends 2021-2025

The Union Budget for 2024-25, to be presented on Tuesday, July 23rd by Finance Minister Nirmala Sitharaman is crucial for India's environmental policy, with promises in renewable energy, electric vehicle promotion, and pollution control. The allocations will indicate the government's priorities in addressing environmental challenges.

Since 2021, India's environmental budget has shifted, the 2024-25 budget is expected to continue these trends, with a focus to address climate change, air and water pollution, and biodiversity conservation. Let’s comprehensively analyse India's environmental budget trends from 2021-22 to 2024-25.

2021-22 Budget: Mixed Allocations

The fiscal year 2021-22 was pivotal for India's environmental budgeting, with the Ministry of Environment, Forests and Climate Change (MoEFCC) receiving an allocation of Rs 2,870 crore, a 6% increase over the previous year. However, this accounted for 0.1% of the total union government expenditure.

The 2021-22 budget allocated Rs 2,217 crore for air pollution control in 42 urban centers. The Vehicle Scrapping Policy aimed to phase out old, polluting vehicles and enhance fuel efficiency.

Budget Trends for Environmental Sectors

The budget increased the National Coastal Mission’s funding by 48%. However, this focus on certain areas came at the cost of others, raising questions about overall environmental priorities.

Key Increases

1. Air Pollution Control: Rs 2,217 crore was allocated for 42 urban centres to combat urban air pollution.

2. National Coastal Mission: Saw a significant 48% increase, emphasising coastal ecosystem sustainability.

3. Centrally Sponsored Schemes got 27% of the total allocation (Rs 766 crore), including the National Mission for Green India.

4. Pollution Control Initiatives: Witnessed a 7% increase, with Rs 470 crore allocated to programs like the National Clean Air Programme (NCAP).

Notable decreases

1. Environmental Knowledge and Capacity Building: Faced a 10% reduction, potentially impacting educational and awareness programs.

2. Autonomous Bodies: Experienced a 3% funding cut, affecting research institutions like the Indian Council of Forestry Research and Education.

3. Biodiversity Conservation: Some specific programs were reduced, but some were incorporated into broader initiatives.

The Urban Swachh Bharat Mission 2.0 allocated Rs 1.41 lakh crore over five years for urban environmental management tasks. But, revealed persistent issues like under-utilized funds due to delays.

2022-23 Budget: Boosting the Green agenda

The 2022-23 budget saw a significant increase in environmental funding, with the MoEFCC receiving Rs 3,030 crore, a 20% increase over the previous year. This year had widespread increases across various sectors, though some areas saw reductions.

The increased allocation, just 0.1% of the total union government expenditure, reflected recognition of the urgent need to address environmental challenges. A key highlight of the 2022-23 budget was the introduction of Sovereign Green Bonds to fund green infrastructure projects. This addressed the funding gap for environmental projects and eventually, position India in the global green finance market.

Significant increases

1. Environment, Forestry, and Wildlife: Saw a major 39% increase to Rs 930 crore, boosting biodiversity conservation.

2. Pollution Control: Got an 18% increase to Rs 460 crore, reinforcing the commitment to improve air quality.

3. National Coastal Mission experienced a dramatic 93% increase to Rs 195 crore, highlighting the growing focus on coastal management.

4. Environmental Knowledge and Capacity Building: Reversed last year's trend with a 22% increase to Rs 79 crore.

5. Capital Expenditure: Doubled from the previous year, mainly benefiting the Botanical Survey of India.

Areas of decrease

1. Autonomous Bodies: Funding reduction continues, but less severe than last year.

2. Statutory and Regulatory Bodies: Allocated funds decreased, raising concerns about oversight.

3. National Authority: Funding reduced.

The budget speech announced a battery-swapping policy to promote electric vehicles, emphasising the government's focus on sustainable transportation. Under the Production Linked Incentive scheme, the Rs 19,500 crore for solar power initiatives marked new directions in environmental financing and renewable energy promotion.

Despite positive developments, the budget faced criticism for not adequately addressing environmental challenges. The allocation for climate change was seen as insufficient given the scale of the challenge and India's international commitments.

Year-wise budget from 2010-11 to 2021-22

2023-24 Budget: Reinforcing Commitments with Allocations

The 2023-24 budget continued increasing environmental allocations, with the MoEFCC receiving Rs 3,079 crore, a 24% increase from the previous year. Some areas saw targeted increases, while others had modest growth or slight decreases.

The 2023-24 budget doubled capital expenditure compared to the previous year, driven by increased funding for the Botanical Survey of India, signalling a renewed focus on biodiversity research and conservation.

Key Increases

1. The Centre’s establishment expenditure of the Centre saw a substantial 41% increase to Rs 903 crore, supporting entities like the National Green Tribunal.

2. Environment, Forestry, and Wildlife received a 38% increase to Rs 759 crore, bolstering the Green India Mission and Project Tiger.

3. Pollution Control: Experienced a 26% increase to Rs 756 crore, further supporting the National Clean Air Programme (NCAP).

4. Capital Expenditure: Continued significant increase, benefiting the Botanical Survey of India.

Areas of Concern

1. Central Pollution Control Board (CPCB): The allocation of Rs 105 crore represented a 9% decrease from 2021-22 actuals, despite a 5% increase over the 2022-23 revised estimates.

2. Climate Change Adaptation and Mitigation: Experts argue that the allocations remain insufficient for the scale of the challenge.

The Energy Conservation (Amendment) Bill, 2022, allowing carbon credit trading, signaled new market-based approaches to emissions reduction. This, along with the continued issuance of sovereign green bonds, demonstrated India's efforts to align environmental policies with global sustainable finance trends.

2024-25 Interim Budget: Big Promises, Mixed Reactions

The Union Interim Budget for 2024-25, released in February 2024 by the Modi government, has sparked significant discussion, especially among environmental advocates. The budget, presented by Finance Minister Nirmala Sitharaman, highlights a commitment to "Green Growth" to achieve net-zero emissions by 2070. It includes announcements like Viability Gap Funding for one gigawatt of offshore wind energy, plans for coal gasification and liquefaction to reduce imports, and mandates for blending compressed biogas in transport and domestic gas supplies.

The budget proposes financial support for biomass segregation machinery, installing solar systems in one crore households, and strengthening the electric vehicle ecosystem. However, the budget has been criticized for overlooking key environmental concerns.

The Ministry of Environment, Forest and Climate Change (MoEFCC) received only a 34% budget increase, which many argue is insufficient for the pressing environmental challenges.

The budget made significant cuts to critical programs like the Clean Air Action Plan and disaster response departments, including the National Disaster Response Force (NDRF). Despite the emphasis on solar energy, funding for the Solar Energy Program was reduced, and the PM eBus scheme for public transport transformation received less funding than metro projects.

As we await the 2024-25 budget, India's environmental allocations have improved since 2021, reflecting a growing awareness of environmental responsibilities. The upcoming budget will set India's environmental policies for the year and signal the country's commitment to a greener future.