As part of its Nationally Determined Contribution (NDC) targets for 2022, India has committed to achieving a number of ambitious targets such as reducing emissions intensity of GDP by 45% per from 2005 levels by 2030, increasing its renewable energy capacity to 500 GW by 2030 and achieving net zero. status by 2070.
Some of the key initiatives to achieve these goals relate to energy and transportation transition, reversing deforestation and land degradation, reducing the carbon footprint of agriculture, reducing food waste, and more. The associated investment has been estimated at over ₹11 lakh crore per year between 2015 and 2030.
It is therefore encouraging to see that the 2023-2024 budget makes “green growth” 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 significant share of this spending over the years. Some of the key initiatives outlined in the current budget to this end include:
Transition to renewable and low-carbon energy through initiatives such as the National Green Hydrogen Mission (₹19,700 crore); the implementation of priority investment projects for energy transition and security by the Ministry of Petroleum and Natural Gas for an expenditure of ₹35,000 crore; viability gap financing (VGF) for the development of energy storage projects with a capacity of 4,000 MWH on a PPP basis; increase the transmission grid to evacuate 13 GW of renewable energy from Ladakh with an investment of ₹20,700 crore of which the government will invest ₹8,300 crore; Increased adoption of coastal cabotage through VGF-supported PPPs to reduce costs and associated carbon footprint.
Facilitate the adoption of the LIFE framework to support livelihoods through the Green Credit Program which will incentivize businesses, individuals and local organizations to adopt environmentally friendly practices;
Encourage the adoption of circular economy concepts in several sectors through initiatives such as the Galvanizing Organic Bio-Agro Resources Dhan (GOBARdhan) program which envisages the establishment of 500 “waste-to-wealth” factories with an investment of ₹10,000 crore; financial support to all central and state government agencies for the implementation of the vehicle scrapping policy which was announced in 2021.
Facilitate land rejuvenation, reforestation and the reduction of the carbon footprint of agriculture by encouraging states to adopt alternative fertilizers and ensure a balanced use of chemical fertilizers through the PM-Pranam program; help 1 million farmers adopt natural farming by creating 10,000 bio-input resource centers as part of a national micro-fertilizer and pesticide manufacturing network; reforestation of mangroves through the MISHTI program; land rejuvenation and optimal use of wetlands, enhancement of biodiversity and carbon stock and promotion of ecotourism and income generation through the Amrit Dharovar programme.
While the above initiatives clearly go in the right direction, some specific measures to encourage private participation in climate finance have not been covered by the current budget. Representative examples include related tax and regulatory concessions for investors in sovereign green bonds that have just been launched in the country; a first corpus for the expansion of carbon markets and for the establishment of a liquidity and stabilization fund for carbon markets; incentives for potential investors in the carbon market.
However, unlike in the past where the Union budget was set in stone when it was announced, contemporary budgets have been more dynamic with new initiatives announced and spending changes throughout the year. It remains to be seen whether some of the above measures to encourage private participation and activate market-based mechanisms will be addressed subsequently.
(The author is partner, Deloitte India)