- India’s annual budget presented on February 1, 2021, talked about continuing with reforms in sectors such as mining and focused on infrastructure.
- The push for mining and development of roads etc., however, could spell trouble for affected communities and ecologically sensitive areas.
- Experts welcomed some of the budget announcements related to the environmental sector but noted that many of them are just token measures while it lacks intent.
In May 2020, while the economy was facing a slowdown due to Covid-19, the government of India announced a special package worth Rs. 20 trillion for AtmaNirbhar Bharat (self-reliant India), which had measures for all sectors of the economy, including a focus on the mining sector. The budget announced by the government on February 1, 2021, picks up that thread from months ago with a focus on the mineral sector and infrastructure.
The budget brings some good news, in terms of attention towards the environment and clean energy sector. Announcements in the budget included measures for the water sector, renewables, deep-sea biodiversity conservation, controlling pollution, and a hydrogen energy mission.
The May 2020 Atma Nirbhar Bharat (ANB) package was followed by two more small packages to revive the economy. India’s Finance Minister Nirmala Sitharaman, in her budget speech, said the total financial impact of all ANB packages including measures taken by the Reserve Bank of India was estimated to about Rs 27.2 trillion – which amounts to more than 13 percent of India’s gross domestic product.
She said the ANB packages have “accelerated our pace of structural reforms” while recounting that “commercialisation of the mineral sector and agriculture and labour reforms” were undertaken during that period.
However, since their announcement in May last year, both the mining and agriculture reforms have been severely criticised for ignoring the concerns of the communities and stakeholders involved. The commercialisation of the coal sector to decrease India’s coal imports has been under the scanner for ignoring the ill-impacts of mining and rehabilitation issues of the affected communities.
In fact, “power, petroleum, coal and other minerals” is one of the main focus areas of Indian government’s policy on “strategic disinvestment of public sector enterprises.” Through disinvestment, the government of India is targeting an estimated Rs 1.75 trillion in 2021-2022.
“We have kept four areas that are strategic where bare minimum CPSEs (central public sector enterprises) will be maintained and rest privatised. In the remaining sectors all CPSEs will be privatised,” said Sitharaman in her speech.
This would mean that the government would open those sectors for private investment while decreasing its own participation to the minimum possible – a move which, once given a final shape, may face resistance as mining by private players in India is often embroiled in conflicts related to land, rehabilitation and resettlement of mining-affected people and pollution-related issues.
According to the data of the Land Conflict Watch, a research group, there are about 52 ongoing mining-related conflicts affecting about 832,114 people involving an investment of about Rs 1.41 trillion.
Another major announcement made by the government in the budget was related to the government announcing its intention of monetising the land.
“The non-core assets largely consist of surplus land with government ministries/departments and public sector enterprises. Monetising of land can either be by way of direct sale or concession or by similar means. This requires special abilities and for this purpose, I propose to use a special purpose vehicle in the form of a company that would carry out this activity,” said the finance minister in her speech.
Some hope for environmental issues in the budget
The budget did show some hope for green issues. The finance minister announced the government’s intention to launch Jal Jeevan Mission (urban) for ensuring universal water supply in all 4,378 urban local bodies with 28.6 million household tap connections, as well as liquid waste management in 500 cities. The project envisaged to be implemented over five years has been proposed at a cost of Rs 2.87 trillion.
To tackle air pollution, the finance minister proposed to provide an amount of Rs 22.17 billion for 42 urban centres in the country with a million-plus population. She also announced a “voluntary vehicle scrapping policy, to phase out old and unfit vehicles” to encourage fuel-efficient and environment-friendly vehicles which will ultimately help in reducing vehicular pollution.
Vivek Adhia, India country director of the Institute for Sustainable Communities, while praising the budget, said: “’India’s Union Budget 2021 lays out clear directions for green, rapid and resilient recovery with a significant boost in infrastructure investments and reform measures.”
“Continued outlay on the clean air program coupled with a boost in sustainable transport measures and vehicle scrappage policy in place, will help improve urban air quality across most regions. With most cities staring at day-zero and increased water risks – the urban Jal Jeevan Mission, aimed at universal access for all – hopefully, will bring in the right momentum on clean water and sanitation,” Adhia said.
The finance minister announced that the government will focus on “faecal sludge management and wastewater treatment, source segregation of garbage, reduction in single-use plastic, reduction in air pollution by effectively managing waste from construction-and-demolition activities and bio-remediation of all legacy dump sites.”
The government also announced that their flagship Ujjwala Scheme which it claims to have benefited 80 million households will be extended to cover 10 million more beneficiaries. However, the government’s own survey paints a different picture of the success claims.
While Romit Sen, associate director of the water and agriculture program, Institute for Sustainable Communities, remarked that the “focus on enhancing household access to water in urban areas is a welcome move” but noted that “the budget did not have any mention of addressing water quality problems.”
“With a large number of habitations affected by water quality one cannot realise the mission of clean and safe drinking water for all. Similarly, while the focus on solid and liquid waste management is encouraging, the budget lacks proposals for enhancing water supply through source strengthening, wastewater recycling,” Sen said.
Vibhuti Garg, an energy economist with the Institute of Energy Economics and Financial Analysis (IEEFA), said: “While there is an allocation for augmentation of public bus transport services, it doesn’t say whether it will be electric vehicles.”
“There is a sum allocated to tackle air pollution and on the other hand, the government is extending the timeline for compliance of emission norms by power plants, which is a major cause of pollution. There needs to be a holistic approach, whereby pushing clean energy on one hand should not be weakened by pushing dirty fuels along with it,” Garg emphasised.
Experts argue that environmental concerns seem to have taken a back seat while the government focuses on the recovery of the economy.
Aarti Khosla, who is the director of Climate Trends, said, “while the budget announces good initiatives like a mission on hydrogen energy, a vehicle scrapping policy and reducing allocation to coal exploration, reducing the budget for autonomous institutes under the union environment ministry amounts to a symbolic message that when cash strapped environment takes a back seat.”
“Given the government’s strong push on renewables and the intention of being a global climate leader it is crucial that the highest level of decision-makers see merit in an economic recovery which is sustainable and in line with principles of environmental integrity,” Khosla told Mongabay-India.
Sitharaman’s budget also had a push for infrastructure including roads, national highways, dedicated freight corridors and ports. Many of the highway/road projects announced by the finance minister in her speech were related to states where elections are scheduled such as West Bengal.
The finance minister also said more than “13,000-kilometre length of roads, at a cost of Rs. 3.3 trillion, has already been awarded under the Rs. 5.35 Bharatmala Pariyojana project of which 3,800 kms have been constructed. By March 2022, we would be awarding another 8,500 kms and complete an additional 11,000 kms of national highway corridors.”
However, this may become worrying news for many of the ecologically sensitive areas as it has been witnessed over the years that highway/road projects end up dissecting ecologically sensitive areas impacting the environment and wildlife.
Deep-sea exploration and hydrogen mission on the cards
The central government announced that it will launch a “Deep Ocean Mission” with a budget of Rs. 40 billion over five years to “cover deep ocean survey exploration and projects for the conservation of deep-sea biodiversity.”
Sitharaman also announced to launch a Hydrogen Energy Mission for generating hydrogen from green power sources – a plan that Prime Minister Narendra Modi had talked about in November 2020.
Gautam Das, who is the co-founder and chief executive officer of Oorjan Cleantech private limited stressed that “the budget focuses on the transition to alternative sources of energy and providing support to ailing power distribution companies.”
“There has been no major announcement with respect to solar energy except a nominal increase in the customs duty for solar inverters and lanterns to boost make in India mission. With more details coming in, we are hopeful that even the power ministry (MoP) will roll out pro-solar reforms including the abolition of the restriction on net-metering,” Das said.
Banner image: Disinvestment in the strategic sector of power, petroleum, coal and other minerals is one of the focus areas of the central government in this budget. Photo by Shankar S/Flickr.