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Budget 2013: the path remains the same

Posted on: 1 Mar, 2013

There is little budget allocation to steer the country towards ecologically sustainable development

Finance minister P Chidambaram said in his budget presentation that “higher growth leading to inclusive and sustainable development” was the mool mantra of budget 2013-14. Since growth so phrased is also the theme of the 12th Five Year Plan, he reiterated that development must be sustainable both economically and ecologically. In short, he must mean what he says. So how sustainable is the budget he laid before Parliament on Thursday?

The answer needs a frame: What are the key environmental challenges that the country faces? India today faces local as well as global environmental threats. On the one hand, we have failed to manage our pollution. On the other, we are being burdened with the onerous task of tackling climate change.

India is really fighting with its filth—air and water pollution and waste management problems. Outdoor air pollution—caused largely due to vehicles and industries—is the fifth largest cause of deaths in the country. More than 600,000 people die prematurely every year because of its toxic presence. Most worryingly, annual premature deaths caused by particulate air pollution have increased six times since the turn of the new millennium. Half the people living in urban India breathe air with particulate matter that exceeds the permissible levels; one-third lives in critically polluted areas.

The problems of water pollution and waste disposal are equally menacing. Of all the sewage our cities generate, not even one-fourth is treated. This is the most important reason the country, it can be said, has turned hydrocidal—our filth is killing our rivers and water bodies. On top of that, most of our industrial and mining areas are critically polluted. Our environmental regulators simply do not have the capacity to control industrial pollution.

Lastly, but no less crucial, climate change now poses a serious threat to the country’s development. India will not only have to consciously invest to adapt to this change, it will also have to invest in clean energy transition to reduce carbon emissions.

If we look at the budget in terms of these challenges, Chidambaram’s budget is a big disappointment. The finance minister has used all the right words. But there is little budgetary allocation, a verifiable sign of government’s commitment, to back the words. How then will he steer the country towards ecologically sustainable development?

To put it crudely, the budget of the Union Ministry of Environment and Forests has actually gone down in real terms. Its outlay for 2012-13 was Rs 2,430 crore and remains the same for 2013-14. In fact, the outlay is barely 0.35 per cent of the total Central plan outlay. This shows the supreme importance the Centre accords to the nodal environmental agency of the country.

On matters of pollution, the budget makes some noise. On vehicular air pollution, apart from increasing excise duty on SUVs marginally and increasing the allocation for buying buses under the urban renewal mission, the budget has nothing to offer. On water pollution, the budget promises a programme to incentivise setting up effluent treatment plants for the textile industry. Given that in the 11th Five Year Plan, the government had promised to clean all rivers, and has reiterated the promise in the 12th Plan, this is pure mewling.

To solve India’s garbage problem, the finance minister has offered a scheme for waste-to-energy projects through public-private partnership. Most environmentalists will oppose such an approach as it is not going to solve the garbage problem. Indeed, it might end up creating toxic air pollution problems for the future. What India needs is a waste management strategy that encourages segregation, recycling and reuse. In doing exactly the opposite, the budget has uttered a few sounds of silence.

The Economic Survey now has a chapter on sustainable development and climate change, introduced last year. The government woke up to the need for sustainable development in light of the threats posed by climate change. This year’s survey devoted 15 pages to a list on the threats climate changes poses and what the nation plans to do, domestically and internationally, to address the many challenges of climate change. As it is, it’s just a list. In his budget speech, Chidambaram did not even mention this rapidly compounding threat. He gave no indication of the government’s approach to climate change. There was no mention of state action plans on climate change and how they would be funded, though most states now have such a plan in place, simply because the Centre insisted they do so. There was also no indication of how the country plans to change lanes and drive up the low-carbon development path, except for a few programmes for the renewable energy sector. Most importantly, the budget was a big disappointment on utilisation of the National Clean Energy Fund.

The fund was established in 2010-11 to support research and innovative projects in clean energy technologies. The government imposed a cess of Rs 50 on a tonne of coal to fund its coffer. Since then, about Rs 3,000 crore has been collected every year. But this money is going nowhere. This year, too, the finance minister was non-committal about this fund. His only proposal is to use the fund to provide low interest-bearing funds to “viable” renewable energy projects. What is viable? What is the scale of funds available? And, at what rate of interest? Don’t ask.

The budget, however, is good for the wind energy sector. It has allocated Rs 800 crore to a generation-based incentives scheme for wind. A quick analysis reveals this amount will be sufficient to incentivise more than 5,000 MW of wind installed capacity in the year to March 2014.

This little breeze apart, the budget proposals cannot take us on the path of ecologically sustainable growth. For the finance minister, lame driving remains sane driving.



Can we think of an Environmental Budget similar to Railway Budget which may address all the issues judiciously necessary for real sustainability.

13 April 2013
Posted by
Pulak Das

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