India just about stays on course for green economy

But takes a regressive step in this year’s budget with a huge allocation for coal

India’s annual budget, announced on February 1, was long on intentions to move towards a green economy, but short on specifics.

In her budget, finance minister Nirmala Sitharaman emphasised an incentive scheme for around two million farmers to move to solar-powered irrigation pumps from diesel and grid-supplied electricity, but said nothing about ameliorating its effect on critically short groundwater reserves. Around 30 million traditional pumps are in use for irrigation now.

She announced a scheme by which around 1.5 million farmers could put up solar panels on fallow land and sell electricity back to the utilities, but was silent on meters that can track two-way flow of power. That is a must for such sales. There is a serious shortage of these “smart meters’ in India.

With 15 of the world’s 20 most polluted cities in India, air pollution is a big issue, and the finance minister has asked cities with million-plus populations to formulate and implement plans for ensuring cleaner air, giving them Rs 4,400 crore (USD 617.84 million) for the purpose.

The finance minister also said coal-fired power plants that failed to put in pollution control equipment would be asked to shut down, but did not put it in the form of either a rule or a directive – it is merely an advisory to power producers, who are repeatedly going to court and saying they cannot afford to put in such equipment. Most of these power producers are state-owned, and their pleas are being supported by the government’s own power and coal ministries. And in the budget, allocation for cooking gas – important to reduce indoor air pollution caused by firewood – is down by 59% from the last financial year.

Sitharaman increased the allocation for the Ministry of Environment, Forests and Climate Change by nearly 5% to Rs 3,100 crore (USD 435.31 million) over the Rs 2,955 crore in the preceding year. Allocation to the Ministry of New and Renewable Energy (MNRE) was raised by 10.62% to Rs 19,479.74 crore (USD 2.74 billion). It still is 52% lower than the coal ministry’s budget.

Much of the rise in the MNRE budget is due to a push for off-grid renewable energy generation projects.

Talking about the steps taken in the budget to combat climate change, Ajay Mathur, director general of the New Delhi-based think tank TERI, referred to the Coalition for Disaster Resilient Infrastructure (CDRI) launched in 2019. He said it would “help in addressing a number of Sustainable Development Goals (SDGs) and enhance climate change adaptation with a focus on disaster resilient infrastructure. CDRI envisions enabling measurable reduction in infrastructure losses from disasters, including extreme climate events. CDRI thus aims to enable the achievement of objectives of expanding universal access to basic services and enabling prosperity as enshrined in the Sustainable Development Goals, while also is working at the intersection of the Sendai Framework for Disaster Risk Reduction and the Paris Climate Agreement.”

But not everyone was happy. Vinay Rustagi, managing director of the renewable energy consultancy Bridge to India, told indiaclimatedialogue.net, “There is nothing concrete in the budget for renewables apart from some vague statements on solar pumps and installation by railways. Funding for smart meters should improve distribution efficiency over time. Overall, the budget is highly disappointing as there was a lot of anticipation about new policy measures in view of the problems being faced by the sector.”

Charmaine Sharma, partner at Observing Ecotech LLP, a Gurugram-based green technology firm based in Gurugram on the outskirts of New Delhi, said, “The amount of funds allocated, that is Rs 22,000 crore (USD 3.01 billion), is for the entire RE Sector, which will include solar, wind, biofuels etc. However, the industry requires clarity on which government organisation/ministry/department will allocate these funds and on what basis.”

Addressing farmers’ distress

This year’s budget has made an attempt to address the India-wide distress of farmers – hit by lower production often worsened by climate change impacts, or by collapsing prices when they do produce well. M.S. Swaminathan, the father of the Green Revolution and the head of Chennai-based MS Swaminathan Research Foundation, told indiaclimatedialogue.net, “I am very happy that there is a detailed plan for agriculture and rural development, not just in words, but also comprehensively on what can be done, as well as in terms of the resources needed. This is important since agriculture is the occupation of the majority.”

“The Economic Survey of 2020 presented on January 31, 2020, provides the statistical and intellectual foundation for the priorities included in the budget.  An important message is that we should adopt a holistic approach in helping farmers and farming. In the 1960s (the Green Revolution period), technology, techno infrastructure, training and internal and external trade were all attended to in a holistic way. The economic survey emphasises the need for a technological upgrading of agriculture that happened during the Green Revolution period.  This will call for greater investment in science and technology as well as in providing farmers with effective supports. Seed villages also need to be revitalised. We have all the ingredients essential for agricultural progress, but they need to be brought together.”

“There has been repeated emphasis on income generation occupation for non-farm income. What is now envisaged in terms of balanced utilisation of fertilisers, farming and certification needs to be done in a more scientific way. If states and the centre work together, we will be able to see progress, not only in agriculture, but in the rural economy as well. If all the programmes are implemented effectively, farmers’ distress will go down.”

Electric vehicles

The budget does provide some support for electric vehicles, though it has been buried deep in the details, perhaps in deference to the powerful automobile manufacturers’ lobby. Still, there was some criticism from Sandith Thandasherry, CEO of NavAlt Solar and Electric Boats, who said, “The discrimination against water transport continues. Currently, Phase 2 of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME 2) support is only for electric vehicles and not for electric boats. Also, the GST for boats is 5%, but the input tax is higher – it is 18% and 28% and the average is 20%.”

Water for all?

The promise to provide piped water to every rural household in India is likely to be the current government’s flagship scheme, the one development plank on which it will seek re-election in 2024. This year’s budget has allocated Rs 11,500 crore ($1.6 billion) to this purpose.

India’s latest National Sample Survey report says 21.4% of families get piped water at home.

Most observers agree that the government is likely to lay pipes to a majority of rural homes in the next four years or so. The questions are how much water will flow through those pipes, the quality of the water that will flow, its source, and the sustainability of this supply.

Sunderrajan Krishnan, executive director of the Indian Natural Resource Economics and Management Foundation, told the data journalism website IndiaSpend that it was crucial to see various aspects of the programme together rather than in silos. “If a village needs piped water, it may also require MGNREGS [Mahatma Gandhi National Rural Employment Guarantee Scheme] for infrastructure-related work or labour for water resource sustainability. This will require convergence of three schemes in this case. But this does not mean that larger issues of energy policy that incentivise increased water-use can be ignored.”