Climate change: Green commitments in the Union Budget 2024-2025

In an attempt to address the pressing challenges of climate change and promote sustainable development, Finance Minister Ms. Nirmala Sitharaman unveiled the Union Budget 2024-25 on 24 July. 

The budget outlines a comprehensive strategy to enhance climate resilience, support green initiatives, and improve disaster management. With a focus on flood mitigation, energy transition, and critical resource management, the budget tries to highlight the government’s commitment to fostering a greener, more sustainable future for India.

Some of the major announcements relating to climate change and sustainability from the Union Budget are:

• To enhance the availability of capital for climate adaptation and mitigation, the government will develop a taxonomy for climate finance. This initiative is designed to support the country’s climate commitments and facilitate a smoother transition to a green economy.

• The government proposes to establish a Critical Mineral Mission to focus on the domestic production, recycling, and international acquisition of essential minerals. This mission will emphasize technology development, the creation of a skilled workforce, the implementation of an extended producer responsibility framework, and the establishment of an appropriate financing mechanism. 

• The government proposes to introduce a policy document to guide energy transition, aiming to balance economic growth, employment, and environmental sustainability.

• The government will exempt customs duties on 25 critical minerals and reduce duties on two others to support key sectors such as nuclear energy and high-tech electronics.

• The government seeks to provide assistance to Bihar, Assam, Himachal Pradesh, Uttarakhand, and Sikkim for flood management, reconstruction, and rehabilitation through various projects and multilateral development aid, with an estimated total cost of ₹11,500 crore.

• The PM Surya Ghar Muft Bijli Yojana will install rooftop solar plants, providing free electricity up to 300 units per month to 1 crore households, with over 1.28 crore registrations.

• The government will collaborate with the private sector to develop small and modular nuclear reactors and support R&D for advanced nuclear technologies.

• To address the environmental and health hazards posed by non-biodegradable PVC flex banners, the government will raise the Basic Customs Duty on their imports from 10% to 25%.

• An 800 MW Advanced Ultra Super Critical (AUSC) thermal power plant will be established through a joint venture between NTPC and BHEL, supported by government funding. This comes at a time when countries are committing to move away from coal based power systems. Although, it is clear and settled that no matter how much progress India makes on renewables, base load will continue to be met by thermal power in the country. 

The 2024-25 budget underscores India's dedication to sustainable development through a comprehensive strategy addressing energy transition, climate adaptation, and mitigation. As the world’s fifth-largest economy, India aims to balance growth, job creation, and environmental sustainability, setting a notable example for other nations.

This transition has garnered both praise and criticism. Many commend the budget for its emphasis on climate change issues and mitigation efforts. The Chairman of the Global Wind Energy Council has lauded India's leadership in advancing renewable energy investments. Similarly, the Research Director of ISB has praised the budget’s focus on climate finance taxonomy, climate-resilient agriculture, and digital infrastructure for farming.

However, despite these positive reviews, the budget has faced scrutiny. Critics argue that while it outlines significant climate mitigation strategies, it lacks detailed implementation plans. Concerns have been raised about the feasibility of the proposed policies, with doubts lingering over the implementation timeline and expected outcomes.

To read more on Union Budget, visit TA Resources.

Diya is a research associate at TA. She is a recent graduate in economics.