Economics: Green growth for a sustainable future

Green growth is an approach to economic development that focuses on sustainability and the efficient use of natural resources. By investing in renewable energy sources, sustainable infrastructure, and clean technologies, governments can reduce greenhouse gas emissions and promote economic growth. A transition to green growth can create job opportunities in sectors such as renewable energy, eco-tourism, and sustainable agriculture while reducing costs associated with pollution-related health problems (UNEP, 2011). In addition, a reliance on fossil fuels has led to volatile oil prices that jeopardize long-term economic stability. In contrast, green growth promotes energy security by diversifying energy sources and increasing efficiency (https://www.oecd.org/greengrowth/greening-energy/greengrowthan denergy.htm Accessed 25 March 2023). Therefore, a commitment to green growth can help grow economies sustainably by promoting innovation and long-term planning while improving public health and protecting the environment.

The importance of green growth in India's budget cannot be overstated. As a rapidly developing nation, India must address the growing concerns of climate change and environmental degradation. It is essential to include green growth in its annual budget to achieve sustainable development that simultaneously protects the environment. This can be in the form of increasing investment in renewable energy, promoting eco-friendly industries, and enforcing pollution control measures. Implementation of such measures not only stimulates economic growth but also enhances energy security, reduces dependence on fossil fuels, mitigates emissions, and improves public health by curbing air pollution (OECD, 2011). Furthermore, it aligns with global efforts to tackle climate change and supports the country's pledge to reduce greenhouse gas emissions under the Paris Agreement[1]. Thus, incorporating green growth strategies in India's annual budget is essential for achieving the Sustainable Development Goals (SDGs) while contributing towards environmental protection efforts globally.

What follows is divided into four sections. The next section explores India's endeavour toward green growth and details the measures adopted in this pursuit. Section 3 highlights the implementation of green growth strategies in various budget proposals for India's 2023-24 budget. Section 4 evaluates the constraints on green growth that have the potential to impede India's pursuit of sustainability, especially within the context of the other Budget proposals. The last section concludes the study.

India's green leap

Recent fiscal budgets in India have consistently emphasized a number of strategic measures, such as ethanol blending, PM KUSUM Yojana, incentives for solar manufacturing, rooftop solar initiatives, coal gasification, and battery storage have been consistently emphasized in recent fiscal budgets. Additional endeavours, including green credit for industrial sectors, PM PRANAM Yojna for agricultural communities, Gobardhan Yojna for rural areas, vehicle scrapping policies for urban centers, and Green Hydrogen and wetland conservation programs further contribute to achieving these objectives. It is also noteworthy that since 2014, India has demonstrated unparalleled progress in increasing renewable energy capacity among leading global economies. Reflecting this, Figure 1 below shows some recent rises in the budgetary allocations to the Ministry of Environment Forest and Climate Change (MoEFCC) after a dip in 2020-21.

 

 

 

Figure 1: Union budget allocation to MoEFCC from 2010-11 to 2023-24

 Source: Expenditure Budgets, Government of India (for various years)

 

The recently unveiled 2023-24 budget distinctly emphasizes the importance of green growth by embedding its principles across various components of the budget. Green growth stands as one of India's four potential transformative opportunities during the Amrit Kaal (auspicious period), the run-up to 2047, marking India's 100th year of independence. The remaining three transformative opportunities include the economic empowerment of women, the integration of traditional artisans within the micro, small and medium enterprises (MSME) sector, and the development of tourism. Within the budget's Seven Priorities or Saptarishi, green growth is strategically positioned as the fifth priority, underlining its importance in India's long-term vision of robust economic growth that is environmentally sustainable.

During the budget presentation, the finance minister emphasized the significance of the Prime Minister's vision for "LiFE" - Lifestyle for Environment, as a catalyst for promoting environmentally conscious living. Furthermore, she proclaimed that India as a nation is steadfastly progressing towards the goals of 'Panchamrit'[2] and achieving net-zero carbon emissions by 2070, subsequently contributing to a sustainable industrial and economic transition.

 

 

Envisioning green growth in budget proposals

Among this year's various budget proposals, several key initiatives stand out viz., Green Hydrogen Mission, Energy Transition and Storage Projects, Renewable Energy Evacuation, Green Credit Program, PM-PRANAM, GOBARdhan Scheme, Bhartiya Prakritik Kheti Bio-Input Resource Centres, MISHTI, Amrit Dharohar, Coastal Shipping and Vehicle Replacement.

The Rs.19,700 crore National Green Hydrogen Mission aims to facilitate a low-carbon economic transition, reduce dependence on fossil fuel imports and position India as a technology and market leader in this emerging sector. The goal is to achieve an annual production of 5 million metric tonnes by 2030.

The budget also earmarked Rs.35,000 crore for priority capital investments in energy transition, net zero objectives, and energy security under the Ministry of Petroleum & Natural Gas. In order to promote sustainable development, Battery Energy Storage Systems with a capacity of 4,000 MWh (megawatt-hour) will receive support through Viability Gap Funding to attract investor interest. A comprehensive framework for Pumped Storage Projects will also be established.

Additionally, Rs.20,700 crore inter-state transmission system will be constructed to evacuate and integrate 13 GW (giga watt) of renewable energy from Ladakh into the national grid. This project will receive central support of Rs.8,300 crore. Furthermore, a Green Credit Programme under the Environment (Protection) Act will be introduced to encourage environmentally sustainable actions by companies, individuals, and local bodies. This initiative will provide fiscal incentives and foster the government's LiFE programme, promoting a pro-planet and pro-people way of life while mobilizing additional resources for environmentally conscious activities.

Prime Minister's Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth (PM- PRANAM), has been designed to encourage states and Union Territories to promote alternative fertilizers and ensure a balanced utilization of chemical fertilizers. Under the auspices of the GOBARdhan scheme (Galvanizing Organic Bio-Agro Resources Dhan), there are plans to set up 500 new facilities that convert waste into valuable resources, fostering a circular economy. This initiative involves the development of 200 compressed biogas (CBG) plants and 300 community or cluster-based plants with an aggregate investment of Rs.10,000 crore. In due course, a 5-percent CBG mandate shall be implemented across all entities marketing natural and biogas. Moreover, suitable fiscal support will be provided for biomass collection and bio-manure distribution.

Bharatiya Prakritik Kheti Bio-Input Resource Centres will help shift one crore farmers to natural farming with the help of 10,000 Bio-Input Resource Centres for the next three years. These centres will create a nationwide network for producing and distributing micro-fertilizers and pesticides. Additionally, the Mangrove Initiative for Shoreline Habitats & Tangible Incomes (MISHTI) will be implemented by planting mangroves in select areas along the coastline and on saltpan lands, by leveraging the Mahatma Gandhi National Rural Employment Guarantee Program (MGNREGP), Compensatory Afforestation Fund Management and Planning Authority (CAMPA Fund), and other funding sources.

The government aims to promote unique conservation values through the Amrit Dharohar (Auspicious legacy) scheme, which promotes optimal use of wetlands, enhances biodiversity and carbon stock, and provides eco-tourism opportunities and income generation for local communities. The scheme will be implemented over the next three years. It is worth noting that local communities have always been at the forefront of conservation efforts, and in his latest Mann Ki Baat (Inner Thoughts)[3], the Prime Minister highlighted that there are now 75 Ramsar sites[4] in the country - a significant increase from the 26 before 2014. Wetlands are vital ecosystems that sustain biological diversity. In addition, coastal shipping will be promoted as the energy-efficient and lower-cost mode of transport - both for passengers and freight - through the PPP mode with viability gap funding.

To reduce emissions, vehicle replacement initiatives will focus on scrapping old vehicles, allocating funds to replace obsolete government vehicles and supporting states to update their fleets. Green mobility measures, such as excise duty exemptions on blended compressed natural gas and customs duty exemptions for lithium-ion battery manufacturing equipment, serve to make electric vehicles more affordable for consumers. To further bolster the domestic battery manufacturing industry, the government must strategize towards acquiring critical minerals from abroad and enhancing domestic processing capabilities.

The budget also recognizes other green growth priority areas. To help states and cities transition into 'sustainable cities of tomorrow', urban planning reforms will be encouraged. These include ensuring efficient use of land resources, adequate resources for urban infrastructure, and transit-oriented development, as well as increasing the availability and affordability of urban land and providing opportunities for all.

It was also proposed that three Artificial Intelligence (AI) centres will soon be established in top educational institutions, and will collaborate with leading industries for interdisciplinary research, developing cutting-edge solutions for agriculture, health, and sustainable cities. A stronger emphasis will be placed on the "scientific management of dry and wet waste," in addition to enabling the mechanical desludging of septic tanks and sewers in cities and municipalities to switch from "manhole to machine-hole mode." The Upper Bhadra project in the drought-prone central region of Karnataka will get central assistance of Rs 5300 crore to offer sustainable micro-irrigation and fill surface tanks for drinking water. The government will provide a Research and Development (R&D) grant to one of the IITs (Indian Institute of Technology) to promote the indigenous development and production of lab-grown diamonds since this emerging sector has high employment potential, eco-friendly properties, and similar characteristics as natural diamonds.

The budget allocation for green growth has increased for various ministries and missions. The Ministry of Environment, Forest and Climate Change received Rs.3,079.4 crore this year as against a revised estimate of Rs.2478 crore in the last budget and a separate budget of Rs.459 crore was allocated for the National Mission on Natural Farming. The budget for controlling pollution increased from a revised estimate of Rs.600 crore last year to Rs.756 crore in the latest budget. The Ministry of New and Renewable Energy received an increased budget of Rs.10,222 crore in the Union Budget 2023-24-an increase from the revised estimate of Rs.7,033 crore, to reduce reliance on fossil fuels. Furthermore, the budget for solar energy central sector schemes has increased from Rs.185 crore in the last fiscal to Rs.361 crore. Also, the solar power industry has received Rs.5331.5 crore in the current budget, as opposed to Rs.3365 crore in the last budget, including funds for both on-grid and off-grid projects (Table 1).

 

 

Table 1: Budgetary allocations of important ministries and missions
Ministry/ Mission	2022-23 (RE)	2023-24 (BE)
Ministry of Environment,
Forest and Climate Change (MoEFCC)	Rs.2478 crore	Rs.3,079.4 crore
Reference https://economictimes.indiatimes.com/industry/renewables/view-budget-2023-ensured-india-is-primed-for-green-growth/articleshow/97821780.cms?from=mdr Accessed 23 March  2023. https://pib.gov.in/PressReleasePage.aspx?PRID=1901622#:~:text=Green%20growth%20is%2 0one%20of,large% 20number%20of%20green%20jobs. Accessed 23 March 2023 https://planet.outlookindia.com/news/budget-2023-24-gives-boost-to-green-growth-news-414796 Accessed 23 March 2023 https://thewire.in/environment/green-growth-budget-2023-24 Accessed 23 March 2023 https://www.indiabudget.gov.in/ Accessed 21 March 2023 OECD. (2011). Green Growth and Developing Countries: A summary for Policy Makers.  25-26. UNEP. (2011). Towards a green economy: Pathways to Sustainable Development and Poverty Eradication.