What does India’s union budget mean for a responsible energy transition in the country?
We believe that India’s energy transition should not only position India as a leader in renewable energy, but should ensure that it is also a just one — that it drives deep positive transformation, enables flourishing and resilient communities, holds to the principles of justice and equity at its core, and contributes to the regeneration of environmental systems.
India’s Union Budget for 2023–24 was delivered on 1 February — a much awaited budget that focuses squarely on India’s energy transition to a low-carbon economy. India’s Finance Minister Nirmala Sitharaman sent out an important signal by including green growth among the top priorities; the budget allocated INR 35,000 crore (US$4.3 billion) “for priority capital investments towards energy transition and net-zero objectives, and energy security.”
“The industry is at front for any policy-making. It is only through exchanges such as this that make the policies responsive. Industry has to come up with the prevailing dynamic picture. Industry will determine how India moves forward on green hydrogen mission. It need not be that the government should be the prime mover. Government has set a benchmark for how we are growing.”
– Minister of Finance and Corporate Affairs of India, Nirmala Sitharaman, taken from ET EnergyWorld, “Sitharaman urges industry to set standards in renewable energy”, 3 Feb 2023.
As part of the Responsible Energy Initiative, we believe that India’s energy transition should not only position India as a leader in renewable energy, but should ensure that it is also a just one — that it drives deep positive transformation, enables flourishing and resilient communities, holds to the principles of justice and equity at its core, and contributes to the regeneration of environmental systems.
Programme Directors from the Responsible Energy Initiative India share their perspectives on the budget and what it means for India’s energy transition.
“Finance Minister Nirmala Sitharaman has made two clear points that together are extremely powerful in the quest for responsible renewable energy: 1) a commitment to significant ongoing funding through the budget, and 2) an expectation for the renewable energy industry to set the standards that will then guide policy. This is the sector’s opportunity to ensure that RE is ecologically safe, socially just and drives a thriving India.”
– Anna Biswas, Managing Director, India, Forum for the Future
“The budget continues a healthy trend of prioritizing greening the economy, with specific outlays for energy transitions and battery storage sectors. It will be important to look at the fine print to assess if the government has paid greater attention to energy efficiency, decarbonizing infrastructure and transport, integrating circularity, and sustainable cooling. It will be great to see India prioritize and embrace “responsible energy” principles to minimise the social and environmental impacts of the energy transition, especially the establishment of large renewable energy projects. Hopefully, the outlays for the energy transitions and battery storage can be implemented with circularity, social and environmental norms in mind.”
– Bharath Jairaj, Executive Director, Energy, WRI India
“The 2023–25 budget has greatly focused on accelerating the development of green sectors to achieve targets under various sustainable development goals. The commitment of more than INR 85,000 crores itself is indication of the government’s long-term ambition towards climate action.”
– Shirish Garud, Director, TERI
Here are some snippets from other articles we found insightful:
ET Energyworld: Budget 2023 reinforced India’s green transformation objective but more was needed (2 Feb 2023)
“Overall, the Union Budget does set the tone on policy on clean energy and touches on most action areas but falls short on game-changing measures to step up energy transition and energy security. With rapid demand growth the power sector is operating on very thin (or even negative) operating reserve margins at times. With a strong underlying economy energy demand growth is likely to continue. Inadequate generation capacity expansion could very quickly lead to energy deficits in the coming years. Perhaps more policy measures will be announced through the year as it had been in the past given the fast-changing space.”
– Anish De, Global Head, Energy and Natural Resources, KPMG
The Hindu Businessline: Financing India’s energy transition (30 Jan 2023)
“First, the policy regime at both the Centre and the States must assure high quality investment. Second, the financial markets buy into this story so that India’s private sector is not penalised by a deterioration in India’s credit rating. Third, that the effective fiscal cost of multilateral borrowing is not materially affected by its foreign currency denomination.”
– Suman Bery, Vice Chairman, NITI Aayong
Times of India: Union Budget 2023 must accelerate India’s energy transition (23 Jan 2023)
“Our Budgets are now roadmaps for a green, sustainable future with a resilient, decarbonised economy. India is thinking long-term and not just about the financial year.”
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First, support a circular economy in renewables. Given the strategic and critical materials present in clean energy waste, the central government could provide incentives to recyclers doing high-value recycling. Secondly, provide financial support to deploy energy storage projects. Energy storage will be critical to integrate renewable energy into the grid. The government has already announced a trajectory to increase the share of energy storage (via the Energy Storage Obligation). Viability gap funding for energy storage projects (like in solar) can make storage services affordable for discoms. Thirdly, build on the advanced battery PLI scheme and develop the capability to manufacture raw materials required for battery cell manufacturing.”
– Arunabha Ghosh, CEO, Council on Energy, Environment and Water
If you wish to learn more the Responsible Energy Initiaitive India, reach out to Saksham Nijhawan at S.Nijhawan@forumforthefuture.org
