BackSitharaman unveils India’s first green budget
In a bid to push energy transition and achieve net-zero objectives and energy security, the government has provided ₹35,000 crore for priority capital investments
PremiumThe finance minister presented a phenomenal budget, which sets the Indian economy on the right track for continued growth. Her speech succinctly projects this year’s economic growth at 7%. I believe the economy is on the right track despite challenges, both global and domestic. The Indian economy has increased in size from the 10th to the fifth largest during the past nine years.
The minister has chalked up seven priorities for this budget - inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, Green Growth, youth power and financial sector. This is a step in the right direction which will help boost the economy further. The government’s efforts towards a better quality of living and a life of dignity have paid off as the per capita income has more than doubled to ₹1.97 lakh.
The finance minister’s budget speech also recognized key game changers like - digital public infrastructure, including Aadhaar, Co-Win and UPI, the covid vaccination drive, which was carried out in unparalleled scale and speed, a proactive role in frontier areas such as achieving the climate-related goals, Mission LiFE and National Hydrogen Mission.
What I find really interesting is that there is a new rigour to encourage agritech startups in rural areas. The formation of the Agriculture Accelerator Fund will add a significant boost to startups, which will bring innovative and affordable solutions for rural entrepreneurs.
In my opinion, over the last nine years, the National Rural Livelihood Mission has been a major success. It has mobilized rural women. More than 8 million Self Help Groups (SHGs) and the government will now enable these women to reach the next stage of economic empowerment through the formation of large producer enterprises or collectives, with each having several thousand members. These initiatives will help the government to promote the economic empowerment of women in our country. Additionally, FM’s move to fund railways is a very good way to gain the highest spike in statistical numbers for GDP and employment multiplier. The 33% increase in the capex budget will have a multiplier effect.
I strongly feel that this budget should be classified as the First Green Budget of India. To achieve a net zero emissions goal by 2070 under the Net Zero pledge, the finance minister has rolled out a comprehensive Green Growth Strategy.
India is set to achieve its aim of 40% installed electric capacity from non-fossil fuels ahead of 2030. The likely installed capacity from non-fossil fuels will be more than 500GW by 2030, resulting in a decline of the average emission rate by around 29% compared to 2014-15.
The recently launched National Green Hydrogen Mission, with an outlay of ₹19,700 crore will facilitate the transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports and make the country assume technology and market leadership in this sunrise sector. The government has set an ambitious target of reaching an annual production of 5 MMT by 2030.
In a bid to push energy transition and achieve net-zero objectives and energy security, the government has provided ₹35,000 crore for priority capital investments. Moreover, an investment of ₹20,000 crore, including the central support of ₹8,300 crore has been proposed for renewable energy evacuation and grid integration by laying interstate transmission of 13GW of renewable energy from Ladakh.
FM has proposed a slew of measures to boost financial inclusion. The revamped credit guarantee scheme for MSMEs will take effect from 1 April 2023 with an infusion of ₹9,000 crore corpus. This will enable additional collateral-free guarantee credit of ₹2 trillion and reduce the cost of credit by 1%. The increase in capital expenditure is expected to increase growth potential and job creation, crowd in private investments, and provide a cushion against global headwinds.
I am of deep conviction that this budget is going to be remembered as a historical exercise when India takes a decisive step towards transforming itself to the goal of becoming a developed economy and global superpower.
The minister asserted that the indirect tax proposals will promote exports, boost domestic manufacturing, increase domestic value addition and promote green energy and mobility. She has proposed changes in the basic customs duties, ceases and surcharges on toys, bicycles, automobiles and naphtha. The number of basic customs duty rates on goods other than textiles and agriculture will be reduced to 13% from 21%. To further provide impetus to green mobility, customs duty exemption will be extended to import capital goods and machinery needed for the manufacture of lithium-ion cells for batteries used in EVs.
The government has proposed a one-time new savings scheme for women with a tenure of two years to offer a 7.5% interest rate with a partial withdrawal option. Similarly, senior citizens will benefit from the increase in the maximum deposit limit for savings to ₹30 lakh from ₹15 lakh.
(Contributed by Manisha Girotra, CEO of Moelis India)
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