- The Union Budget prioritised resilience in agriculture, energy security, and urban development, with a subdued focus on the green sector.
- It announced new schemes and a National Mission on high-yielding and climate-resilient seeds to boost agricultural productivity, while energy security was emphasised through increased funding for renewable energy and critical mineral exploration.
- The budget comes with major announcements related to nuclear energy, promising to amend the existing law and goal of 100 GW by 2047.
Union Finance Minister Nirmala Sitharaman delivered her eighth budget speech on February 1, adopting a subdued approach to environmental and green sector priorities. While she announced schemes aimed at making agriculture more resilient, transforming urban areas, and ensuring energy security — including an ambitious goal for nuclear energy — the budget fell short of expectations for stronger climate-focused initiatives.
This cautious stance was somewhat anticipated, as the Economic Survey, which reviews the state of the economy, had already hinted at the government’s tempered focus on climate action when it was released on January 31. The survey, which serves as a precursor to the budget, dedicated significant attention to the climate negotiations held in Baku in November 2024, which concluded with a $300 billion climate deal to flow from developed to developing countries by 2035. India had opposed the agreed-upon deal in Baku and reiterated its concerns in the survey, saying that “the funding shortfall may lead to a reworking of the climate targets.”
Ulka Kelkar, Director of Climate at the World Resources Institute (WRI) India, said that the survey reflected global developments and geopolitics, and its influence was evident in the budget’s lukewarm approach to climate goals. Kelkar observed, “For the last three years, the budget has strongly focused on climate, energy, and sustainability as drivers of job creation and economic growth. While these areas were mentioned in the budget this year, the emphasis seemed somewhat lower.”
The finance minister addressed several vulnerabilities exacerbated by climate change, particularly in food security and urban growth. In agriculture, she introduced the Prime Minister Dhan-Dhaanya Krishi Yojana (PMDDKY) to enhance productivity, promote crop diversification, and encourage sustainable farming practices. While targeting 100 low-productivity districts, the scheme aims to improve post-harvest storage at the panchayat and block levels and strengthen irrigation infrastructure. She also announced a national mission on high-yielding seeds to advance research, develop pest-resistant and climate-resilient seed varieties, and bolster the seed ecosystem. The budget also proposed establishing a second gene bank with one million germplasm lines to support future food and nutritional security, offering conservation resources for both public and private sectors.
For urban development, Sitharaman unveiled a Rs. one lakh crore (Rs. one trillion) Urban Challenge Fund to support initiatives under ‘Cities as Growth Hubs,’ ‘Creative Redevelopment of Cities,’ and ‘Water and Sanitation.’ An initial allocation of Rs. 10,000 crores (Rs. 100 billion) has been proposed for the 2025–26 financial year.

Energy security remains a priority
The Economic Survey underscored the importance of affordable energy security. It used past and present evidence from the global world to analyse the energy transitions that have happened so far. It concluded that “commercial interests and energy security remain the most significant factors in the transition pathway even today.”
The budget reflected this emphasis, with the finance minister announcing measures for critical minerals, which are key to new-generation technologies and renewable energy but vulnerable to geopolitical and supply chain disruptions. She also proposed mining sector reforms, including policies for recovering critical minerals from tailings.
Decentralised renewable energy received a significant boost as the allocation for the government scheme for solar rooftops and household-level electricity generation, PM Surya Ghar: Muft Bijli Yojana, increased by 80% to Rs. 20,000 crores (Rs. 200 billion), up from Rs. 11,100 crores (Rs. 111 billion) in the current financial year. The scheme promotes rooftop solar. Similarly, funding for the PM Kisan Urja Suraksha evam Utthan Mahabhiyan (KUSUM), a scheme aimed to boost farmers’ income by encouraging the use of solar energy, has also increased. Sitharaman also announced incentives for electricity distribution reforms and intra-state transmission expansion.
Ulka Kelkar noted that the PM Surya Ghar scheme has significant potential and, if implemented well, could accelerate progress by addressing existing barriers.
The finance minister also introduced a National Manufacturing Mission to give a push to the manufacturing sector and highlighted that clean tech manufacturing will be a strong component of the mission. The initiative aims to boost domestic value addition in solar PV cells, EV batteries, motors, controllers, electrolysers, wind turbines, high-voltage transmission equipment, and grid-scale batteries.
Sandeep Pai, Director for Research and Strategy of Energy Transition at Swaniti Global, observed that the overall direction of the budget remained unchanged, meaning it helps India move towards clean energy goals. However, he pointed out that China and the Western countries had begun recovery of critical minerals from tailings in the 1990s, while India is only now trying to catch up. “Therefore, aggressive research and development (R&D) of alternate ways to extract critical minerals is the need of the hour, he said.” Swaniti Global is an independent research institute.
On mining sector reforms, Pai noted that while the government has expressed intent, details are still emerging. He stressed the need for a balanced approach that considers the interests of local communities, adding that the Community Benefit Agreement system must be robust to ensure fair outcomes.

The nuclear path of securing energy future
Finance Minister Nirmala Sitharaman made a significant announcement related to nuclear energy, unveiling a Nuclear Energy Mission (NEM) aimed at achieving 100 GW of nuclear power capacity by 2047. She described this mission as essential for India’s energy transition efforts. The NEM will focus on the research and development of Small Modular Reactors (SMRs). Sitharaman emphasised the need for active private-sector participation to achieve this ambitious goal. She announced that the government will amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act (CLNDA) to facilitate this collaboration.
The Economic Survey had earlier highlighted nuclear energy as an efficient and increasingly reliable alternative to fossil fuels. In July 2023, Jitendra Singh, Minister of State in the Prime Minister’s Office and the Department of Atomic Energy, hinted at this direction, stating, “Various studies have projected the need to have a national nuclear capacity of the order of 1 lakh MW (100 GW) by 2047. Recommendations of those studies are being reviewed for possible future adoption.”
However, the Economic Survey also pointed out challenges in adopting nuclear energy. For instance, it highlights that a few countries control the advanced technologies and there is a geographical concentration of uranium and other critical minerals. These factors could pose significant hurdles to India’s nuclear ambitions, the survey highlights.
Globally, nuclear energy adoption remains a contentious issue. The European Commission, for instance, recently proposed including nuclear energy in its taxonomy for sustainable activities. It received criticism from various stakeholders. Critics argue that nuclear energy is not a viable solution to replace fossil fuels due to prolonged delays, cost overruns, geostrategic interests, and industry lobbying. Experts in India have raised similar concerns.
Talking to Mongabay India, E.A.S. Sarma, former Union Power Secretary, questioned the push for nuclear energy, cautioning that reducing carbon emissions should not come at the cost of safety. He highlighted that while climate change is a gradual process, nuclear accidents can have immediate and catastrophic consequences. Citing the nuclear disaster that happened in Fukushima, Japan, Sarma warned that a nuclear accident in India could impose an enormous financial burden on both central and state governments due to the costs of relief operations.
Sarma also critiqued India’s CLNDA, which caps the operator’s liability at Rs. 500 crores (Rs. five billion), calling it insufficient. The finance minister’s promise to amend the CLNDA to encourage private-sector participation has raised further concerns. Sarma argues that, as seen in Fukushima, the actual liability can be many times higher, rendering the current law ineffective and shielding foreign suppliers from accountability. The Fukushima accident, for instance, is estimated to have cost around $200 billion (Rs 17.4 trillion as per present rate of $1 = Rs. 87).
Though he agreed that grid reliability is a concern in energy transition as solar and wind remain intermittent energy sources, he asked for a cautioned approach that prioritises safety, transparency, and accountability.

Underutilisation of funds, a growing concern
A pattern of underutilisation of funds has emerged in the budget document as several key programmes under the Ministry of Environment, Forest and Climate Change (MoEF&CC). It raises concerns about the efficiency of fund deployment.
In the last financial year, the Conservation of Natural Resources and Ecosystems programme spent only Rs. 300 million out of Rs. 435 million allocations. Similarly, the Integrated Development of Wildlife Habitats failed to utilise Rs. 500 million. The National Tiger Conservation Authority (NTCA), responsible for overseeing tiger conservation efforts, failed to utilise Rs. 50 million. This trend of underutilisation extends to the energy transition and other sectors as well.
Debadityo Sinha, Senior Resident Fellow and Lead of the Climate & Ecosystems team at the Vidhi Centre for Legal Policy, noted that while the government is able to overspend in sectors like solar energy, it struggles to utilise allocated funds in the conservation sector. “Either they lack the capacity to use the allocated money, or this is not a priority for them,” he said. However, he added that the focus on decentralised energy is a positive step.
Ulka Kelkar emphasised the need to strengthen implementation capacities. “I think it is important to strengthen the capacity of states, cities, and even gram panchayats to access and effectively utilise these budgetary allocations for climate action,” she said.
Banner image: Solar panels on a guest house roof at Phuktal Gompa, Zanskar, Ladakh. The union budget increased allocation to the government scheme for solar rooftop and household-level solar electricity generation, giving a boost to decentralised renewable energy. Image by Timothy A. Gonsalves via Wikimedia Commons (CC-BY-SA-4.0).