Did you forget the green stuff, Mr. Finance Minister?

— Shashwat DC

It is a rather known fact, that the current NDA government places development over environment. Not surprisingly, there was little expectation in terms of ‘green-ness’ of the current budgetary announcements. Yet, given the whole sphere of things, especially with the big push for renewable energy, there was much hopes in terms of push for renewable power. Sadly, the Union minister of Finance, Arun Jaitley almost seemed to gloss over provisions on green norms or environmental legislations, and there were little incentives provided to do good. Anyone looking for details on setting a roadmap to a green future in the budgetary provisions will be much disheartened.

The big question to ask is whether, union budget can actually help the cause of environment? Indeed it can, through fiscal measures that either incentivise (rebates/discounts) or penalise (cess) different things. Over the years, numerous incentives were provided (like for wind power) or cess imposed (on coal) to promote green uptake. This year’s budget seems to be leaning more on the penalise part, using the stick more than dangling the carrot.

The biggest announcement (on the green front) was the increase in Clean Energy cess that is imposed on coal. From current Rs. 100 per tonne, it was increased to Rs. 2000 per metric tonne to fund clean environment initiatives. Next, the excise duty on sacks and bags of polymers of ethylene other than for industrial use was also being increased from 12% to 15%. To add to that, the finance minister proposed to levy a Swachh Bharat cess at the rate of 2% or less on all or certain services if need be.

Coal-Mines_0In practice the Clean Energy Cess is more like a Carbon Tax, and was introduced in 2010. The cess is presently levied on coal, peat and lignite to finance and promote clean energy initiatives and fund research in this area. Yet, there are many shortcomings in the application. As of last information, the government had collected Rs 6,857.50 crore in clean energy cess last fiscal. While the earlier government was sitting over the funds, the current government intends to use it for cleaning the Ganga. Which is not really in line with the core purpose, namely, of research and development of non-renewable resources. Also, the increase in cess is bound to affect the end-user (considering that coal is the source for over 50% of India’s electricity generation), as the utilities like Coal India are bound to pass on the price increase to the consumer.

In fact, we have a very bad history of governments collecting money and then either not spending them or wasting them. Take the case of the Compensatory Afforestation Fund Management and Planning Authority (CAMPA), which was sanctioned under the aegis of Ministry of Environment and Forests. For 2014-15, a budget of Rs. 136.77 crore had been sanctioned under CAMPA, to be used for environmental norms but only some 50-60% had been utilised. Thus, the fear that like CAMPA, the Clean Energy Cess might not work out the way it is intended to, is not really misplaced

In terms of incentive, the FM announced a scheme for rapid manufacturing and adoption of electric vehicles to tackle pollution. An initial outlay of Rs. 75 crore for the scheme for the period 2015-16 was made. Considering the vast size of India, this money is a pittance and would really not help in creating the charging infrastructure, as was the original intention. Couple of years back, the government had announced the National Electric Mobility Mission which provided subsidy to the car buyer, but even that was too complicated and did not really help the uptake of electric vehicles. The current sanction will not even cause a ripple to be fair.

On the renewable energy front, there has been nothing new from the FM. All that the budget says about it, is that the Ministry of New Renewable Energy has revised its target of renewable energy capacity to 1,75,000 MW till 2022, comprising 100,000 MW Solar, 60,000 MW Wind, 10,000 MW Biomass and 5000 MW Small Hydro. There are no new announcements or incentives. No GBP (Generation Based Profit) or subsidies for manufacturing in India either (a demand which all the Indian companies had asked). There have been some announcements in terms of reduction of excise and tax duties that will enable marginal reduction of prices of LED lights, solar heaters and so on. There are also some incentives announced for waste water treatment.

There could have been some good announcements on the renewable front, like incentives for roof-top solar. There could have been subsidies and concessions provided to corporates for captive generation of power. Various state governments across the board are offering incentives for investment in renewable energy, the minister could have aided the same through fiscal measures. There could have been cheaper loans made available through banking institutions and so on. But that was not meant to be.

The big things missing in this budget were vision and innovation. For instance, even when the FM spoke about the CSR funds, it was in regards to the flagship scheme of NDA. “I have proposed 100% deduction for contributions, other than by way of CSR contributions, to the Swachh Bharat Kosh. A similar tax treatment is also proposed for the Clean Ganga Fund,” he said. One of the interesting bits done by the earlier UPA government was to allow corporates to spend their CSR funds on research in association with academic institutions like IITs. This could have helped immensely in research on newer technologies, but did not happen. Also, for instance, when the policies were announced for promoting entrepreneurship, special sectors could have been picked out, related to environment and social development and could be provided special incentives. There is a need for a micro-financed shutterstock_206269015movement for social innovations, and this budget could have set the agenda for it. While one could hear about promotion of tourism, there is no mention made of bio-diversity conservation, like enhancing the Project Tiger, rhino protection, or even creating a special corridor for wild elephants.

In the end, as said earlier, this budget leans more towards the stick than the carrot. Considering how things move in the renewable, environment and social space, incentives always work better than forfeiture. In that way, this budget by FM Arun Jaitley is a let-down really. There’s just not much green out here. Guess, we will now have to wait another year, hoping for a green miracle.


Leave a Reply

%d bloggers like this: