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Sansad TV: Perspective- Green Budget





Aiming to reduce the carbon intensity of the Indian economy, meet clean energy targets, and provide large-scale green job opportunities, Finance Minister Nirmala Sitharaman announced a slew of measures for Green Growth while presenting the Union Budget. This included initiatives related to green fuel, green farming, green mobility, green buildings, and green equipment. Policies for the efficient use of energy across various sectors of the economy are also being implemented. The Finance Minister announced an outlay of 19,700 crore rupees for the recently launched National Green Hydrogen Mission and 35,000 crores for priority capital investment toward energy transition, net zero objectives, and energy security by the Union Ministry of Petroleum and Natural Gas. Among a host of measures FM also announced viability gap funding for battery energy storage systems with a capacity of 4,000 megawatt hour in order to spur sustainable development.

Green Budgeting:

  • Green budgeting means using the tools of budgetary policy-making to help achieve environmental and climate goals.
  • This includes evaluating environmental impacts of budgetary and fiscal policies and assessing their coherence towards the delivery of national and international commitments.
  • Green budgeting can also contribute to informed, evidence-based debate and discussion on sustainable growth.
  • Any approach to green budgeting should build on a country’s existing public financial management (PFM) framework and thus be attuned to the strengths and limitations of the existing budgeting process.
  • For instance, where countries have a strong performance budgeting system, they might seek to integrate performance objectives related to national environmental and climate goals.
  • Alternatively, where countries have a well-instituted spending review processes, they may wish to focus on incorporating consideration of the impact of measures on climate goals alongside considerations of efficiency
  • The Union Budget 2023 builds on India’s commitment to lead the global action against climate change, preserve biodiversity and support sustainable development.
  • The promised capital outlay and policy frameworks to support a range of specific initiatives are aimed at accelerating clean transition and sustainable growth.
  • The budget further defines India’s firm stance on green growth by articulating the government’s strategy for economic development.
  • The announcements in the budget resonate with India’s climate change policies and are aligned with the country’s net zero goals, COP27 commitments and the updated Nationally Determined Contributions (NDCs).

Strong Strategic Framework:

  • It is particularly important that the government’s strategic priorities and objectives relating to the environment and climate are clearly set out so as to help inform fiscal planning.
  • For example, national climate change or environmental strategies that set out relevant priorities and goals. These strategies and plans help guide tax and spend decisions so that they can support the achievement of national objectives.

Green budgeting tools

  • They help gather evidence on how budget measures impact environmental and climate objectives. The tools used by each country should build on the existing PFM framework, but may include
  • Green budget tagging – Classifying budget measures according to their environmental and/or climate impact.
  • Environmental impact assessments – Requiring environmental impact assessments to accompany new budget measures.
  • Ecosystem services, including carbon, pricing – Putting a price on environmental externalities, such as greenhouse gas emissions, often through taxes and emissions trading systems, to facilitate achievement of national environmental and climate goals.
  • Green perspective to spending review – Incorporating consideration of the impact of measures on national environmental and climate goals alongside considerations of efficiency.
  • Green perspective in performance setting – Integrating performance objectives related to national environmental and climate goals

Biodiversity conservation, agriculture:

  • The 2023 budget firmly intends towards biodiversity and natural resource conservation. An array of initiatives announced align India with the Global Biodiversity Framework at the UN Biodiversity Conference.
  • The government has also proposed mangrove plantations along the coastline and salt pan lands under the MISTI initiative (Mangrove Initiative for Shoreline Habitats & Tangible Incomes) that would employ MGNREGS, CAMPA Fund and other resources.
  • To encourage the optimal use of wetlands, enhance biodiversity, carbon stock, eco-tourism opportunities and income generation for local communities, the Amrit Dharohar scheme will be implemented over three years.
  • The budget includes initiatives for green agriculture as agricultural activities are considered a major contributor (14% by some estimates) to the total greenhouse gas emissions.
  • The new initiative of PM-PRANAM (PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth), for example, promotes alternative fertilisers and balanced use of chemical fertilisers.

A modern budgetary framework:

  • It provides a strong enabling environment for green budgeting.
  • This includes a budgetary framework where there are links between strategic planning and budgeting, multi-annual budget envelopes, outcome and evidence-based budget processes, along with close engagement with parliaments and civil society.
  • The implementation of Green Budgeting is also supported by strong political leadership, clearly defined roles and responsibilities within government, a well-designed sequence of implementation, internal systems that are fit-for-purpose and the development of capacity and expertise among civil servants.
  • It should also be coherent with other budget initiatives, such as gender budgeting.


As India looks to the future, it seeks to pursue an inclusive and sustainable growth trajectory by ensuring responsible consumption and sustainable resource management.