As far as climate and energy priorities are concerned, this year’s budget offers yet more proof of the Indian administration’s bet on climate action and decarbonisation as an engine of growth in the long run.

A budget of signals and sounds: Going beyond the numbers of India’s “Green Growth” budget

India’s latest budget doubles down on decarbonisation, but is lopsided in its view of climate change

The final full budget of the Indian administration before the next general election has come at an interesting time. India’s finances have had to contend with considerable macroeconomic headwinds over the past year as efforts to contain inflation have seen monetary conditions tighten around the world. With one eye on next year’s elections, the government would also want to maximise the electoral dividend of the budget. This has forced a balancing act between fiscal consolidation, capital expenditure and populist reforms. The total size of the budget is ₹45.03 lakh crore (~USD 547.7 billion) (a 7.5% jump from the revised estimate for FY 22-23), almost a third of which will come from market borrowings, which is the largest ever. The balancing act that the Finance Ministry has been forced into has translated to sharp reductions in subsidies for fertilizers, fuel and food.

As far as climate and energy priorities are concerned, this year’s budget offers yet more proof of the Indian administration’s bet on climate action and decarbonisation as an engine of growth in the long run. In her budget presentation, Indian Finance Minister Nirmala Sitharaman doubled down on “green growth” as a core developmental priority moving forward, and positioned it as a part of a seven-pronged long-term strategy. Not a big surprise given the government’s statements in recent years, as well as schemes looking to promote manufacturing in various green sectors and clean energy technologies. This year’s budget, however, is also a testament of the lopsidedness of the Indian government’s view of climate change and climate action.

Green infra on the come up 

This year saw a few new announcements of schemes explicitly targeting a growth in manufacturing in sectors considered critical to decarbonisation. The budget document, though, positions Sovereign Green Bonds as one of the main financing mechanisms for climate and clean energy allocations. The first tranche of the bonds worth ₹8,000 crore were issued on January 25 with the other half scheduled to be issued in mid-Feb. 

Capital raised from these bond sales will be directed to a Sovereign Green Fund which has been slated to fund around ₹20,000  crore (~ USD 2.4 billion) worth of spends in the current fiscal. These include ₹4,000 crore for grid-connected solar projects, ₹1,214 crore of grid-connected wind projects, ₹1,996 crore worth of solar pumps through KUSUM,₹297 crore for the National Hydrogen Mission and ₹169 crore for the Green India Mission. The largest piece of the Green Fund pie, ₹12,479 crore, however has been allotted to the Railways ministry for energy efficient locomotives and metro rail projects.

The FM, in her speech, detailed the target for India’s much touted National Green Hydrogen Mission. The mission, as per Sitharaman’s presentation, will aim to establish green hydrogen production capacity of at least 5 MMT (Million Metric Tonne) per annum with an associated renewable energy capacity addition of about 125 GW in the country by 2030 and bring investments of over ₹8 lakh crore.

The Green Sovereign Fund currently accounts for under 0.5% of the total budget, but it gives some sense of consolidation of climate spends. In the absence of a dedicated climate-responsive budgeting exercise, this consolidation will help greatly in the tracking, monitoring and evaluation of climate-related funding. 

While the first tranche of SGBs was fully subscribed, half of the bond purchases reportedly came from state-run banks and insurance companies. The government will be hoping for better private participation in the second issuance. With recent clarity on the nature of these investments, which will be considered investments in infrastructure, one would expect greater private participation in future bond sales. With a sustainable taxonomy and a rulebook for ESG investments in the works, the budget provides clear signals of the Indian government’s plans to use SGBs to mobilise private capital for its decarbonisation objectives 

 Ministry of New and Renewable Energy  (in crore)

Financial YearBudget AllocationRevised EstimateActual Spend
Feb 2018-1910316.84 10835.14 10459.15 
Feb 2019-2012353.8112466.32 10450.85 
Feb 2020-2113726.74 10089.38 9505.56 
Feb 2021-2211778.00 21474.19 15880.59 
Feb 2022-2328570.99 27547.47 
Feb 2023-2437828.15 
Budget for the Ministry of New and Renewable Energy over the last five financial years, showing an upward trend in budget allocation year-on-year. Source:

Big bets on green energy

There are however a number of allocations that pertain to decarbonisation that are not covered by the green fund. Allocations for FAME to accelerate manufacturing of EVs and EV components have seen a sharp rise of almost 80% compared to revised estimates for FY 22-23 and have been set at ₹ 5,171.97 crore. Battery and energy storage manufacturers will now be able to avail viability gap funding which was a major industry demand, as the government aims to establish 4,000 MWh of storage capacity. The Green Energy Corridor has been allocated ₹500 crore for FY 23-24, which is double the revised estimates from the previous fiscal. 

The announcement made on accelerating the scrappage of old government vehicles is also a welcome move, and will finally set the ball rolling on the electrification of government fleets. Off-grid solar has also been given a big bump, with the allocation raised almost six times from the ₹61 crore announced last year to ₹361 crore this year. Public renewable energy investment agencies IREDA and SECI, have been given a longer leash to expand their asset portfolios. The Finance Minister’s budget presentation included allocation of ₹20,000 crore (central assistance of ₹8,300 crore) for the development of power transmission in Ladakh, although this is not reflected in the Budget document and the plan is likely to be developed further in the current fiscal. 

In with the new, but not out with the old

Also announced was ₹ 35,000 crore (~USD 4.25 billion) set aside as priority capital investments towards energy transition, net zero objectives and energy security under the Ministry of Petroleum and Natural Gas. While this is not reflected under a single head in the budget document, this allocation will likely go toward abatement technologies, carbon capture and enhanced oil recovery projects and refining capacity. A roadmap for carbon capture and enhanced oil recovery for India’s oil and gas companies was released last year, and included details of pilot projects being undertaken.

Last year’s coal shortages and associated power crunch made its way into the budget document. Allocations for coal and lignite exploration have been increased significantly in the current budget, going from ₹ 250 crore to ₹ 450 crore. The government will likely also look at the prospects of gasification and hydrogen production to hedge this bet on coal.

Exploration of Coal and Lignite (in crore)

Financial YearBudget AllocationRevised EstimateActual Spend
Feb 2018-19500.00500.00654.32
Feb 2019-20600.00755.05 659.47
Feb 2020-21700.00485.00 443.39
Feb 2021-22330.00470.05425.05
Feb 2022-23250.00430.00
Feb 2023-24450
The table shows the budget for Exploration of Coal and Lignite under the Ministry of Coal over the last five financial years. Source:

Credit where credit is due?

A big announcement in Sitharaman’s budget presentation that went largely under the radar is the announcement of a “green credits” programme, exact details of which will emerge when it gets notified under the Environment Protection Act. The move, in line with the government’s Lifestyles for Environment (LIFE) initiative, will seek to incentivise behaviour change among industries and individuals by proscribing scores to entities in accordance to the environmental footprint of consumption choices.

How these scores will be calculated and how they will translate to benefits and entitlements for individual and commercial consumers is yet to be seen. Such a scheme carries dangers that the government will have to navigate, including avenues of greenwashing that such a scheme will likely open up as well as the potential penalisation of aspirational consumption, the burden of which will disproportionately fall on those that have historically contributed the least to climate change.

Adaptation slips out of the agenda 

Allocations pertaining to climate impacts and adaptation however chart a worrying trend. While disaster management and related infrastructure have seen increases in allotments, allocations under the climate change action plan, the national adaptation fund and climate resilient agriculture have all been discontinued and the outlay for the National Coastal Mission has been steeply cut. Allocations for the coastal mission stand at just ₹12.5 crore compared to the ₹195 crore outlay provided last year. The revised estimate for the previous fiscal, which stands at ₹4 crore (just 2% of the allocation) suggests that the mission has been all but abandoned. Also gone from the budget is the National Mission for Himalayan Studies for which ₹48 crore was set aside last year.

National Adaptation Fund (in crore)

Financial YearBudget AllocationRevised EstimateActual Spend
Feb 2018-19110 (Funded from NCEF*)110 109.78 
Feb 2019-20 (1)100 40 33.82
Feb 2020-218044.24 43.08
Feb 2021-2260 6059.78 
Feb 2022-2360 34 
Feb 2023-24NA
The table shows the budget for the National Adaptation Fund under the Ministry of Environment Forests and Climate Change over the last five financial years, with zero allocation of funds in the current budget. *National Clean Energy Fund. Source:

National Coastal Mission (NCM) (in crore)

Financial YearBudget Allocation Revised EstimateActual Spend
Feb 2018-19165 130.1129.55
Feb 2019-20 (1)95 9690.84 
Feb 2020-21103 68.38 68.34 
Feb 2021-22200 100.9 27.79 
Feb 2022-23195 
Feb 2023-2412.5 
The table shows the budget for the National Coastal Mission (NCM) under the Ministry of Environment Forests and Climate Change over the last five financial years. While the budget for the programme has seen an increase in the past few years, the revised estimates and utilization of the same remained much lower. This is concerning in times when climate impacts are increasing and puts coastal communities and their livelihoods at further risk. Source:

Further, the sustained push for ease of doing business will see a further reduction of compliance requirements. Going by developments over the past decade, many of these relaxations will likely come from the dilution of environmental norms. For farmers, fertilizers could go up in cost as subsidies have been slashed. Instead, a National Mission on Natural Farming has been allocated ₹459  crore . Also slashed is the outlay under the Fasal Bima (crop insurance) programme, which has seen a cut of about 10% in the outlay.

About The Author