By Rieshev Chakraborty
Abstract
The Interim Budget 2024-25 of India represents a strategic roadmap toward sustainable development and climate action, encompassing a range of initiatives aimed at mitigating environmental challenges while fostering economic growth. Central to this vision is the Blue Economy 2.0 agenda, emphasising sustainable coastal development and livelihood support for millions engaged in fisheries and allied activities. The budget also introduces innovative measures in bioenergy, biogas, and coal gasification, with a focus on reducing dependency on carbon-intensive processes and promoting cleaner fuel alternatives. Additionally, significant allocations toward the electric vehicle ecosystem and renewable energy initiatives underscore the government’s commitment to decarbonizing key sectors and advancing green technologies. Through these concerted efforts, the budget sets forth a comprehensive framework for navigating the complex interplay between economic development and environmental sustainability in India.
Introduction
India’s Interim Budget 2024-25, recently presented by Honourable Finance Minister Smt. Nirmala Sitharaman outlines the government’s spending plans for the first half of the upcoming fiscal year. Sustainable development takes center stage in this budget, reflecting the government’s commitment to addressing environmental challenges and fostering green growth. Amidst the global climate crisis, the budget emphasises climate action, the conservation of biodiversity, and the promotion of sustainable practices. From solar power initiatives to bio-manufacturing, the government aims to create a seamless transition toward clean energy and a greener economy.
Blue Economy 2.0
The Interim Budget 2024-25 has unveiled various strategic initiatives to boost Blue Economy 2.0 in India. At the heart of the initiative lie strategies aimed at restoration and adaptation, encompassing actions to rehabilitate deteriorated coastal ecosystems and implement measures to counteract the impacts of escalating sea levels and intensified weather phenomena. These endeavours are pivotal for safeguarding biodiversity, shielding coastal populations, and upholding the essential ecosystem services provided by marine environments.
The Blue Economy 2.0 program will prioritise the expansion of coastal aquaculture and mariculture, essential components in addressing the escalating demand for seafood while alleviating strain on natural fish populations. Through the promotion of sustainable aquaculture methodologies and their integration with sectors like tourism and renewable energy, the program seeks to forge economic prospects for coastal inhabitants while ensuring the enduring sustainability of marine resources.
This development holds promise for the 14 million people engaged in fisheries and allied activities along India’s extensive 7,500 km coastline (encompassing both mainland and islands). For these coastal communities, it means livelihood support and adaptation to the adverse impacts of climate change.
However, concerns persist regarding the possibility of maladaptation resulting from misguided adaptation measures. Maladaptation inadvertently exacerbates the impacts of climate change on communities. To avoid such pitfalls, effective adaptation strategies should prioritise approaches like the cultivation of indigenous seaweeds, deployment of artificial reefs, and stabilisation of beach sand dunes. These measures not only enhance resilience but also provide sustainable livelihoods to local communities.
Bioeconomy, Biogas, and Coal Gasification
The Indian government’s recent announcement regarding the establishment of coal gasification and liquefaction projects marks a significant step toward energy diversification. These projects, with a projected processing capacity of 100 metric tonnes by 2030, offer an alternative to natural gas in fertiliser production and dependency on imported natural gas, methanol, and ammonia. By reducing energy import bills, this move contributes to economic stability and energy security.
Over 50 lakh jobs directly or indirectly depend on the coal mining sector in India. The budget’s emphasis on coal gasification and liquefaction introduces innovative measures that can facilitate a gradual transition away from carbon-intensive coal-based processes. As the nation seeks to reduce emissions, these projects play a crucial role.
The budget also focuses on coal gasification and compressed biogas. By exploring cleaner fuel alternatives, India aims to balance economic growth with environmental sustainability. Compressed biogas, when blended with CNG (Compressed Natural Gas), contributes to a greener transport sector.
The Indian government has taken a significant step by mandating the phased blending of compressed biogas (CBG) with compressed natural gas (CNG) for transportation and piped natural gas (PNG) for domestic use. Additionally, financial support will be extended to facilitate the procurement of biomass aggregation—a critical component in bioenergy production.
This initiative holds immense promise for Indian farmers. By encouraging their active participation in the bioenergy supply chain, it creates a sustainable and economically viable model for managing agricultural waste. Moreover, it directly addresses the pressing issue of toxic smog that plagues northern India due to the indiscriminate burning of crop residue.
The government’s introduction of innovative schemes in bio-manufacturing and bio-foundries is actively nurturing key sectors such as biodegradable polymers, bio-plastics, bio-pharmaceuticals, and bio-agri inputs. By incentivizing the development and adoption of bio-based technologies and products, the government lays a robust foundation for a more sustainable and resilient economy.
Transport Sector
The transport sector in India plays a significant role in the nation’s greenhouse gas emissions, accounting for approximately 12% of the total. In a commendable move toward sustainable transportation, the Interim Budget 2024-25 unveiled a comprehensive plan to strengthen the electric vehicle (EV) ecosystem. This strategic initiative focuses on two critical aspects: manufacturing support and charging infrastructure development.
The budget encourages new-age startups by providing new finance opportunities. Additionally, it supports women-led enterprises through the Mudra Yojana. These measures aim to foster innovation and inclusivity within the EV sector. The government recognizes the importance of decentralised charging infrastructure. By promoting solar-powered charging stations, it aims to enhance accessibility and affordability for EV users.
The budget allocation of ₹2,671 crore for FAME (Faster Adoption and Manufacturing of Electric Vehicles) removes uncertainty around the EV sector. However, it’s essential to sustain direct customer subsidies to drive EV adoption across various categories. While FAME significantly transformed EV adoption in the passenger segment, it overlooked medium and heavy-duty EV trucks. These trucks, although a small portion of registered vehicles, contribute significantly to emissions and air pollution. Incentivizing electric trucks can mitigate costs and accelerate adoption.
The promotion of e-buses also addresses a critical challenge. State public transportation utilities often run at a loss and struggle to allocate capital for e-bus procurement. Despite being twice the cost of internal combustion engine (ICE) buses, e-buses are essential for reducing emissions and improving air quality.
The National Green Hydrogen Mission has received a significant boost, with its allocation increasing from ₹297 crore to ₹600 crore. This move underscores the government’s commitment to deploying green hydrogen technology on a large scale. Green hydrogen, a promising intervention for decarbonizing the steel sector, holds immense potential.
Given the capital-intensive nature of steel production, the scheme’s focus on funding pilot projects under the mission is groundbreaking. These projects will pave the way for practical implementation and showcase the viability of green hydrogen in steelmaking. However, addressing the supply side alone is not sufficient. To create a robust market for low-emissions steel, a parallel plan to boost demand is essential. When such steel becomes commercially available, a ready market will ensure its successful adoption.
The infrastructure initiative PM GATI Shakti Scheme is expected to green last-mile delivery and logistics. By integrating EVs into transportation networks, it contributes to environmental sustainability.
These strategic moves, coupled with economic railway corridor programs, metro rail expansion, and airport development under the UDAN scheme, symbolize an interconnected India—one where economic growth reaches every corner of the nation.
The government’s commitment to a cleaner and greener future through EVs is commendable, and these budgetary measures pave the way for a transformative shift in India’s transportation landscape.
Metals
The budgetary initiatives for 2024-25 have inadvertently triggered a strategic consequence: a surge in demand for critical metals. Zinc, a seemingly unassuming element, plays a pivotal role in infrastructure development. Its contribution to the circular economy cannot be overstated. By aiding corrosion resistance and durability, zinc ensures that our structures withstand the test of time. As we move toward a more sustainable future, galvanized steel—infused with zinc—will significantly reduce recurring maintenance costs.
Silver, beyond its allure as a precious metal, finds a crucial purpose in the solar sector. Its exceptional conductivity and corrosion resistance, make it indispensable for photovoltaic applications. As solar energy gains prominence, silver’s role becomes increasingly vital.
This shift toward critical metals presents a unique opportunity for the mining and metals industry. By aligning with the government’s sustainable development agenda, the industry can contribute significantly to the nation’s growth. As infrastructure development takes center stage, mining companies must rise to the occasion, meeting the country’s demands while ensuring responsible extraction practices.
Moreover, strategic alliances with the Middle East and European countries will secure the critical mineral supply chain for green energy transition. The boost in mining activities will not only drive economic growth but also pave the way for a more sustainable and resilient future.
Budgetary Allocations
As an emerging economy in the Global South, India grapples with the dual challenge of socio-economic vulnerabilities and climate change impacts. With a substantial population at risk, the country faces heightened exposure to environmental shifts. Adding to this complexity, India ranks as the third-highest global greenhouse gas emitter, necessitating urgent action to balance development with environmental stewardship.
The Interim Budget maintains increased funding for the Union Ministry of New and Renewable Energy (MNRE), underscoring the government’s commitment to clean energy initiatives. Alongside bolstering Gross Budgetary Support (GBS), financial assistance is channelled through Internal and Extra Budgetary Resources (IEBR) obtained from Public Sector Undertakings (PSUs).
Notably, there is a significant increase in IEBR support for the Indian Renewable Energy Development Agency (IREDA), a crucial PSU collaborating closely with MNRE. The Internal and Extra Budgetary Resources (IEBR) allocated for 2024-25 (Interim) amounts to Rs 26,499 crore, indicating an increase from the revised estimate of Rs 21,355 crore in 2023-24.
Another pivotal announcement focuses on Green Energy: the phased mandatory blending of compressed biogas (CBG) with compressed natural gas (CNG) for transportation and piped natural gas (PNG) for domestic use. This move aligns with an augmented allocation for the total Bio-Energy Component in the current budget—Rs 300 crore, a substantial increase from the revised estimate of 2023-24 (Rs 75 crore).
With an allocation of Rs 600 crore, the National Green Hydrogen Mission takes center stage, emphasizing sustainable energy solutions. Beyond hydrogen, the budget prioritizes the electric vehicle (e-vehicle) ecosystem. Increased funding for Production Linked Incentive (PLI) schemes in the automobile and auto component sectors aims to boost manufacturing. Additionally, the introduction of advanced chemistry cell (ACC) battery storage in 2022 further accelerates electric mobility.
The sustained focus on manufacturing schemes is pivotal. Notably, the FAME-II scheme has incentivized 1,341,459 EVs as of January 31, 2024, driving adoption and reducing emissions.
The Interim Budget 2024-25 introduces significant changes to budgetary components related to environmental and agricultural initiatives. Notable examples include:
- Total-Environment Protection, Management, and Sustainable Development: Previously overseen by the MOEFCC, these components have undergone restructuring. Their roles are now distributed across various ministries.
- Rainfed Area Development, National Project on Soil Health and Fertility, and Promotion of Agricultural Mechanization for in situ-crop residue management: These initiatives, formerly under the Ministry of Agriculture & Farmers’ Welfare (MOA & FW), are now consolidated within the Rashtriya Krishi Vikas Yojana.
About the author
Rieshav Chakraborty is a 2nd -year student at the Jindal School of Government and Public Policy, pursuing BA (Hons) Economics. His research interests include Behavioral Economics, Environmental Economics, and Development Economics.
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