Green growth continues to be a central pillar of India’s overall development trajectory. The FY24 Budget speech outlined several new priorities, but paving a truly green economy path needs consistent effort.
The formalisation of the National Green Hydrogen Mission is the biggest single-sector push on the green growth agenda. The Rs 19,744 crore allocated to green hydrogen can be used in part as viability gap funding (VGF) to create demand for green hydrogen via the SIGHT (Strategic Interventions for Green Hydrogen Transition) fund. To promote the manufacturing of electrolysers, allocations under the PLI scheme should focus on the indigenisation of higher-value components.
With the growing deployment of renewable energy, grid stability is important for energy system resilience, which is why the Budget has focused significantly on energy storage and grid infrastructure.
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The Rs 20,700 crore allocation to evacuate and integrate 13GW of renewables from Ladakh would spur investments in a region that has had high RE potential but historically low investment. Moreover, the Budget promises VGF for battery energy storage systems for 4,000 MWh. Detailed framework for pumped-hydro storage is awaited but signals clear attention to a dominant source of energy storage.
A simultaneous fillip to mobile storage manufacturing and the transition to electric vehicles has been provided too. Exemption of customs duty for capital goods to produce lithium-ion batteries will reduce the final prices of batteries and make EVs more affordable. The encouragement for scrapping old government vehicles will create demand for EVs and encourage domestic manufacturing, if incentives are designed correctly. Given that the 50-year interest-free loan to states to be spent within 2023-24 can include scrapping old vehicles, this might be a good opportunity to get electric buses for public transport.
However, the Budget could have done more in directly channelling investment towards RE infrastructure. Eight years ago, the target for renewables was raised to 175 GW by 2022 and it is within the next eight that non-fossil electricity capacity must reach 500 GW. Institutional investors could have been nudged towards the sector by imposing RE investment obligations. The domestic bond market could have been deepened through a subsidised credit enhancement scheme. This would have limited fiscal implications but brought funds to clean energy infrastructure.
The Budget has promoted two more areas worth noting. First, promotion of a circular economy is now a budgetary priority—200 compressed biogas plants will be developed with Rs 10,000 crore under the GOBARdhan scheme. The support for the collection and distribution of biomass would encourage a circular economy in the agricultural waste and transport sectors. More can be done to promote recycling plastics and for critical minerals.
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The other push has been towards sustainable agriculture, particularly with the ambition to make 10 million farmers adopt natural farming and setting up 10,000 bio-resource centres to provide for regenerative agriculture. Additionally, the PM Pranam scheme could push agriculture towards alternative fertilisers and the more judicious use of chemical ones. While the Budget promises to create a global hub for millets in India, more efforts are needed for value addition and increased consumer uptake of millet-based products globally.
The promises in the FY24 Budget will drive investments in new sectors. A truly green Budget, however, would outline how India’s transformative targets for a green economy could be achieved timely and strategically.
The writer is Founder & CEO, CEEW