IAS Gyan

Sansad TV & AIR Summaries


15th February, 2023

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  • Finance Minister Nirmala Sitharaman announced a slew of measures for Green Growth while presenting the Union Budget 2023.
  • This included initiatives related to Green Fuel, Green Farming, Green Mobility, Green Buildings, and Green Equipment.
  • The Finance Minister announced an outlay of 19,700 crore rupees for the recently launched National Green Hydrogen Mission and 35,000 crores for priority capital investment toward energy transition, net zero objectives, and energy security by the Union Ministry of Petroleum and Natural Gas.
  • Policies for the efficient use of energy across various sectors of the economy are also being implemented.
  • Among a host of measures Finance Minister also announced Viability Gap Funding for battery energy storage systems with a capacity of 4,000 megawatt hours in order to spur sustainable development.

The aim is to reduce the carbon intensity of the Indian Economy, meet clean energy targets, and provide large-scale green job opportunities.

What is Green Budgeting?

  • Green budgeting means using the tools of budgetary policy-making to help achieve environmental and climate goals.
  • This includes evaluating the environmental impacts of budgetary and fiscal policies and assessing their coherence towards the delivery of national and international commitments.

Why is Green Budgeting required?

Urgent Climate Crisis

  • The world today faces an urgent climate crisis, India considering its size, growing economic heft, and rising stature in world affairs decided to assume a leadership role in addressing climate change globally.

Revised and upgraded NDCs

  • India has revised its Nationally Determined Contribution (NDC) targets to an ambitious 500 GW non-fossil energy capacity, having 50% of its energy requirements met through renewable energy, reducing total projected carbon emissions by one billion tonnes, and reducing the carbon intensity of its economy by less than 45% by 2030 while moving swiftly towards achieving the target of Net Zero by 2070. India has set ambitious energy savings targets, yielding financial gains for consumers and companies while reducing the national burden of creating clean energy infrastructure.

Investments required for Net Zero Target

  • Investments of USD 10 trillion would be needed for India to achieve the net zero target by 2070. Achieving the net zero target would require efforts and investments towards multiple ends such as the greening of electricity supply and decarbonization of mobility, and hard-to-abate sectors of manufacturing industries and industrial processes as well as activities like shipping and aviation. To enable the same, investments would be needed to develop the requisite upstream infrastructure for setting up renewable energy capacity, grid infrastructure, deployment of batteries, and green hydrogen technologies.

Investments required for Non-Fossil Capacity

  • India’s target of establishing 500 GW non-fossil capacity would require a cumulative investment of INR 22.5 trillion (at INR 4.5 million/MW).

Investments required for the Development of Grid Infrastructure

  • The Central Electricity Authority (CEA) estimates an investment requirement of INR 2.44 trillion for the development of grid infrastructure for green power evacuation. Similarly, NITI Aayog estimates that India’s battery potential (stationary and non-stationary applications) would reach 600 GWh by 2030, translating into an investment requirement of INR 5 trillion (at USD 100/kWh).

Investments required for the Development of Green Hydrogen Sector

  • The Government of India also expects an investment of INR 8 trillion in the green hydrogen sector by 2030. In addition, investments in the development and deployment of innovative downstream technologies would also be critical in the fields of manufacturing, land mobility, long-distance transportation etc.

Total Green Finance Flows Target

  • To meet the climate change commitments and net zero targets, India would need an estimated INR 11 trillion of total green finance flows annually by 2030. This is 3.5 times the current annual green finance flows of INR 309 trillion (FY20), as tracked by CPI’s Green Finance Landscape Report.
  • Currently, the domestic sources account for the bulk of the green finance – 87% and 83% in FY19 and FY20, respectively – while the international green finance flows have contributed only to the balance.

Therefore, in the run-up to the national budget, as India aims to address these challenges and increase green investments, dedicated policy, regulatory and institutional interventions should be explored.


  • The Finance Minister said that the Budget 2023 builds on a Focus to Green Growth.
  • The National Green Hydrogen Mission will facilitate the transition of the economy to low carbon intensity and reduce dependence on fossil fuel imports.
  • Target for the hydrogen mission is to reach annual production of 5 MMT by 2030.
  • Rs 35,000 crore allocated for priority investment towards energy transition, net-zero objective.
  • Battery energy storage systems will be supported with Viability Gap Funding.
  • Framework for pump storage projects announced.
  • Inter-state transmission system for evacuation, grid integration of 13 GW of renewable energy from Ladakh to be constructed with investment of Rs 20,700 crore.
  • Green credit program to be notified under the Environment Protection Act for responsive actions by individuals and companies to encourage environment-friendly behaviour.
  • PM program for Restoration, Awareness, Nourishment and Amelioration of Mother Earth (PM-PRANAM) to be launched to promote Alternative Fertilisers and balanced use of Chemical Fertilisers.
  • 500 new waste-to-wealth plans under the Govardhan scheme announced to promote a circular economy.
  • One crore Farmers to be facilitated to adopt natural farming.
  • Building on India's success in afforestation, Mangrove Initiative for Shoreline Habitats and Tangible Incomes (MISHTI) announced.
  • Government to promote conservation values through the Amrit Darohar scheme that will be implemented to encourage optimal use of wetlands, enhance eco-tourism and income generation for local communities.
  • Coastal shipping to be promoted as an energy-efficient and lower-cost mode of transport through the PPP model.
  • FM announces replacing old polluting vehicles is an important part of greening the economy. Adequate funds are to be allocated to scrap old vehicles of the central government, state government and ambulances.
  • Facilitating land rejuvenation, afforestation and reducing carbon footprint of agriculture by incentivising States to adopt alternative fertilizers and ensure balanced use of chemical fertilizers through the PM-Pranam scheme.
  • Supporting 1 crore farmers to adopt natural farming by setting up 10,000 bio-input resource centres as part of a national network for micro-fertilizer and pesticide manufacturing; mangrove afforestation through the MISHTI scheme.
  • Land rejuvenation & optimal use of wetlands, enhancing bio-diversity & carbon stock and promoting eco-tourism & income generation through the Amrit Dharovar scheme.
  • Encouraging adoption of Circular Economy concepts across multiple sectors through initiatives like the Galvanizing Organic Bio-Agro Resources Dhan (GOBARdhan) scheme which envisages setting up of 500 “waste to wealth” plants at an investment of ₹10,000 crore.


Indian Green Bank/Financial Institution

  • Establishing a dedicated and directed financing facility in the form of an Indian Green Bank/Financial Institution.
  • This could be done through an existing or a newly instituted public financial institution having requisite capacities and methodologies in place for evaluation of green investments, expertise to create financing structures suitable for various segments, and an established market renown to tap into global green finance sources

Energy Conservation Act

  • Implementation of the Amended Energy Conservation Act by expanding the footprint of energy efficiency and ushering in a time-bound manner a domestic cap and trade-based carbon market.
  • The implementation of the Act is expected to provide adequate incentives for lowering the carbon footprint of all economic activities and enabling financial instruments based on underlying carbon prices to effectively become an asset class under appropriate financial market regulations.

Green tagging of public expenditure

  • Introduce green budgeting /green tagging of public expenditure heads in central and state-level budgets to track public investments for NDC targets;

Facilitate Global Capital Flows

  • Facilitate global capital flows earmarked for the green from international banks, and asset owners by relaxing external commercial borrowing restrictions and FPI investment limits for green instruments such as green bonds and by adopting acceptable taxonomy and standards for green investments;

Increase Domestic Financial Intermediation

  • Increase domestic financial intermediation to green sectors/businesses by use of directed financing approaches from longer-term sources such as insurance and pension funds.

Final Thoughts

  • Considering the yawning gap in green financing, it is imperative that India sharply scale up its green investments, in general across various sectors and specifically in the greening of its electricity grid, which is still over 80% carbon-intensive.
  • Increasing green investments by such a multiple would demand directed policy, necessary institutional and regulatory interventions, and mechanisms by the Government to increase public investments – an example is the formulation of the sovereign green bond (SGB) framework and the expected issuance of SGBs as a consequence – and reallocating capital through banks, institutions and capital markets towards green end-uses.
  • It is encouraging to see Budget 2023-24 call out “Green Growth” as one of the seven priorities for future growth.
  • A 'green budget' that will pave the way for a greener planet. The focus on 'Green Energy' and 'Green Mobility' demonstrates this government's awareness of the greater challenges the world is currently facing.
  • Budget 2024 could put India on track to become the world's fastest-growing major economy in the coming fiscal year. India is a politically stable economy and is ranked among the top-growing global markets. To top it off, as India strives to be Aatmanirbhar, the rest of the world may come to rely on our country for growth, materials, and profitable investments.