Though the focus was on employment, skills, the Ministry of Micro, Small and Medium Enterprises (MSMEs) and farmers, there were some interesting new ideas presented in the latest Budget by Finance Secretary Nirmala Sitharaman on 23 July to make India greener.
On agriculture, the government strengthened its support for natural farming. Originally spear-headed by the Andhra Pradesh government, natural farming (then known as zero-budget natural farming) was first picked up by the Union government in 2022.
With this Budget, the Finance Minister reiterated the government’s aim to initiate one crore farmers into natural farming techniques. It plans to open 10,000 bio-input resource centres, and has promised resources to help customers locate and differentiate natural produce from chemical-based agriculture by providing improved branding and marketing.
Crop breeding research will be focussed on again in response to the threat of climate change. The government plans to release 109 climate-adapted, high-yielding varieties of 32 horticulture and cereal crops.
Salient features of natural farming
The techniques used in natural farming, based on the scientific and ecological insights of our ancestors, stress on the creation of healthy carbon-rich soil ecosystems using bio-inputs to stimulate fungi and microbes, along with cropping systems integrating trees, crops, herbs and livestock.
The great diversity of crops within a field provides the farmer resilience against the failure of one crop as well as providing habitat for natural predators that control pests. The tenets of natural farming — applying cow manure and urine to the seeds and soil, maintaining year-round soil-cover, banning crop burning, replacing monocultures with a mosaic of trees, shrubs, and herbs — is now common in Andhra Pradesh.
The farms which have adopted this technique have slashed input costs along with the use of irrigation water, while maintaining incomes and producing healthier food that commands premium prices in the markets.
Developing transport infrastructure
One of the major themes of the Budget was to plough improved public finances into increased infrastructure spending. Apart from spending on roads and railways, there was an intriguing announcement to fund the development of Transport Oriented Development (TOD) plans for 14 large cities with more than 3 million people.
Though still at an early stage, if the TOD plan succeeds, it has the potential to transform urban living. Though still novel in India, TOD is common in many east Asian countries. Such developments create highly liveable, compact neighbourhoods where public transport and walking are favoured over motor cars.
The basic concept is for planners to grant new developments around metro stations with high Floor-to-Area-Ratios, restrict residential parking spaces and improve pedestrian facilities using tunnels, bridges and covered footpaths.
Hong Kong has used TOD since the 1970s. The development board acquired land through compulsory purchase at the prevailing price before the new transport route was announced.
Developers submit bids to acquire the rights to develop mixed use commercial and residential buildings around the new metro stations. This policy was instrumental in creating the skyscrapers that form the iconic Hong Kong skyline.
The revenue earned by the city from this ‘land value capture’ has been enough to fully fund the construction of new metro lines. By way of contrast, most cities with a metro rely on huge capital grants from the municipality or national government.
Whether the urban development ministry publishes workable plans to retrofit TOD into India’s haphazard city zoning and on-going plans to build metros remains to be seen. In China, the government seems less inhibited about compulsorily acquiring land and funnelling the profits from rezoning into public goods. The tradition in India isn’t so communitarian.
Energy policy
The Budget does not say much about energy policy and expenditure signalling continuity with its pre-election policy. Back in 2022, India updated its “nationally-determined contributions” (international commitments under the Paris climate agreement) and has a set of energy policies to deliver on the goals.
Progress is being made increasing generation capacity to 50% which is projected to be met by zero-carbon electricity by 2030. In support of the Make in India objective, customs duty is being abolished for goods involved with the manufacture of solar cells and panels.
This will stimulate assembling of such parts locally and will also marginally reduce the price of solar PV installations. The funding for the PM-Surya Ghar scheme supporting the installation of a crore solar PV homes was held at Rs 75,021 crore.
However, the Finance Minister announced funding for a new 800 MW thermal power plant operated as a NTPC-BHEL joint venture in Madhya Pradesh. Contrary to the push for sustainable initiatives, this funding will use ultra-super critical coal technology, which despite being less carbon intensive than the older technology, will remain a major source of greenhouse gas emissions into the middle of this century.
Green taxonomy
India’s energy transition needs huge and sustained investment in green infrastructure. The sums are so large and the threats so near that international climate finance needs to supplement local funding sources.
The Budget announced the Centre’s intention to produce a taxonomy for climate finance to classify legitimate green projects and call-out the greenwash. The EU commission and the Chinese financial regulators pioneered the publication of green taxonomies.
The creation of a taxonomy will take time, and there might be merit in India simply copying either the EU’s or the Chinese model with minimal changes. Their development involves technical experts systematically looking at different economic branches, like agriculture or electricity generation.
They also specify which activities qualify as ‘green’ investments that make a meaningful contribution to our environmental challenges, and which do not.
In the EU taxonomy wind and solar power generation, the manufacture and purchase of EV vehicles qualify while the use of gas or coal — even ultra-super critical coal and hybrid transport vehicles — do not.
If India’s taxonomy is aligned to the international norms, it should help international green investors quickly sift through projects, funds and debt instruments certified with the Indian taxonomy that meet their needs.
Since 2017, the Securities and Exchange Board of India (SEBI) has published and updated green debt guidelines that ensure promoters of green financial products, explaining exactly how investors’ money would be spent.
While these guidelines provided transparency, they gave a lot of wiggle room for ‘mildly’ green projects to be funded even if they are not green enough to contribute to India’s climate or biodiversity goals.
The taxonomy will hopefully set tough green standards that ensure the investment progresses India’s Nationally Determined Contribution (NDC). When the taxonomy is published, we should check to ensure that fossil fuel generation and non-organic agriculture are excluded.
The taxonomy could also be applied to the Reserve Bank of India’s (RBI) green bank deposits, thus ensuring savers funds only lent for genuinely green loans.
The Finance Minister’s first budget for the current coalition government has made incremental progress on old themes like solar power generation and natural farming. It also opens up planning and discussion of game-changing new ideas in urban development/public transport and green finance.
Prashant Vaze is a Goa-based writer and environmental economist. He spent most of his career in the UK civil service, but now focusses on climate finance issues. He’s published a number of climate fiction short-stories and technical articles on climate, the energy transition and finance.
Sources:
https://www.indiabudget.gov.in
Edited by Padmashree Pande.
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their original owners.
Comments are closed.