Climate Change

Climate in Budget 2017-18: notes ban effect likely to leave climate expenditure high and dry

With eyes on upcoming state elections and cool down in the mood towards climate action around the world, no major announcements to offset climate change in the offing

 
By Shreeshan Venkatesh
Last Updated: Monday 30 January 2017
India’s pro-environment allocation is likely to come once again from mitigation-centric allotments in the energy sector. Credit: Takver/ Flicker
India’s pro-environment allocation is likely to come once again from mitigation-centric allotments in the energy sector. Credit: Takver/ Flicker India’s pro-environment allocation is likely to come once again from mitigation-centric allotments in the energy sector. Credit: Takver/ Flicker

The Union Budget 2017-18, to be announced on February 1, is being eagerly anticipated around the country. The budget is a crucial one for the BJP-led NDA government as it looks to win back some of the popular support it had lost in the aftermath of the notes ban that crippled the informal economy over the last three months. The announcement of the budget has also been advanced by a month and will be held together with the railway budget breaking a long-standing tradition of holding the two budget announcements separately, a month apart. The Economic Survey, released every year just before the budget, to assess the country’s economic performance from the past year and requirements for the future, too, has been deferred and the country is going into the announcement pretty much completely in the dark about what to expect.

The step has presumably been taken with an eye on the upcoming state elections in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur and is expected to be heavy on ‘pro-farmer’ and ‘pro-poor’ allocations. This, together with a global shift in the mood regarding climate action following the election of Donald Trump as the President of the United States, means that climate will likely once again be sidelined in this year’s budget announcement. While India has been batting for sustainable lifestyles in International forums, Finance Minister Arun Jaitley all but gave environmental management and conservation a miss during his speech last year and will probably do so again. Even as the existence of the Paris Agreement, which came into force in October 2016, hangs by a thread, a failure to significantly upscale India’s expenditure on battling climate change will leave it with a mountain to climb when India’s ‘Nationally Determined Contributions’ do kick-in in 2020.

 According to the 2016 Economic Survey, the country would need US$ 2.5 trillion (approx. INR 170187500000000) at 2014-15 prices by 2030 in order to meet its commitments. At current levels, this mammoth figure seems way out of bounds and it is unlikely that Budget 2017 will proceed in any meaningful way towards meeting it by 2030.

Last year’s budget did see a 33 per cent increase in the allocations to the Ministry of Environment, Forests and Climate Change (MoEFCC) in keeping with the trend of recent years but almost 95 per cent of this increase was from planned revenue expenses (for salaries and other operational expenses). The real increase was only about Rs 30 crore divided between planned capital expenditure estimates (expenditure on schemes and programmes) and non-planned estimates. In fact, planned capital expenditure saw a dip in comparison to actual expenditure undertaken during fiscal year 2014-15. This worrisome trend is expected to be seen again as climate will likely be sacrificed in lieu of the frayed nerves left by a botchy implementation of the notes ban.

Funds allotted specifically for climate change mitigation, under the National Action Plan on Climate Change (NAPCC), saw an increase last year and will likely be kept unchanged this year as global mood regarding climate change remains on thin ice. The budgetary estimate of about Rs 180 crore for climate change action was split among the Climate Change Action Programme (CCAP) (Rs 30 crore), the National Mission on Himalayan Studies (Rs 50 crore) and the National Adaptation Fund (Rs 100 crore). While this amounted to a meagre 12.5 per cent increase in allocations, it did not take into account the overflow of about Rs 140 crore from the previous year. In the absence of the economic survey, it remains to be seen with the release of the budget how this was negotiated over the past year. It is highly possible that revised estimates from 2016-17, once again, will overshoot the allocations. Even in case of any meagre increase, much of the windfall will presumably go towards paying off the bills from last year and the year before.

One of the big changes in last year’s budget was in the National Clean Energy Fund (NCEF), which after two consecutive years of doubling from Rs. 100 per tonne of lignite or coal in 2014 to Rs. 400 per tonne in 2016, was finally included in the Budget 2016-17. However, whether and how the fund was utilised to meet environment-related expenses is still not known.

While there is unlikely to be any big announcement regarding an upscale of allocations towards climate action, a major chunk of India’s pro-environment allocation is likely to come once again from mitigation-centric allotments in the energy sector with a continued focus on expanding investment in solar energy. Last year, the amount set aside for renewable stood at over Rs. 5,000 crore, which is the highest yet.

 

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