Key takeaways for Renewables from Union budget 2023
On February 1, 2023, Union Finance Minister Nirmala Sitharaman presented the Union Budget for 2023-24 in the Parliament. In her speech, she emphasised the need for a green growth and a clean energy transition in India. The Ministry of New and Renewable Energy (MNRE) was allocated Rs 10,222 crore, a 48 per cent hike from the previous year’s budget of Rs 7,033 crore. While this is a welcome move, there are several key takeaways from the budget for renewables that we need to keep in mind.
- MNRE’s Budget Allocation Is Meagre Compared to Other Ministries
The allocation of Rs 10,222 crore to the MNRE is just 26 per cent of the Ministry of Petroleum and Natural Gas’s allocation, at Rs 41,007.72 crore. Moreover, compared to the total budget allocation of Rs 45 lakh crore, the MNRE’s budget amounts to just 2.2 per cent. This allocation is inconsistent with India’s Nationally Determined Contributions to address climate change. The country has pledged to reduce the emissions intensity of its GDP by 45 per cent by 2030 from its 2005 levels, as per the updated NDC.
- Coal Sector Continues to Expand Despite Being Highly Polluting
The highly polluting coal sector, which plans to continue to expand its coal mines, was allocated Rs 192 crore, equivalent to less than 2 per cent of the MNRE budget (Rs 10,222 crore). This allocation indicates that the government is not serious about transitioning to clean energy and reducing the country’s carbon footprint.
- Priority Capital Investments Towards Energy Transition and Net Zero Objectives
Finance Minister Nirmala Sitharaman had said, “This Budget provides Rs 35,000 crore for priority capital investments towards energy transition and net zero objectives and energy security by Ministry of Petroleum and Natural Gas.” However, it is not clear at this point how this money will be distributed as the budget only mentioned the MoPNG.
- Increase in Off-Grid Solar Projects
On the bright side, various projects within the MNRE received a huge boost compared to the previous years. Among them is the increase in the money allocated towards off-grid solar projects. The budget increased to Rs 361.50 crore in 2023-24 from Rs 61.50 crore in 2022-2023. Off-grid solar projects cover the implementation of Phase-III of the off-grid solar Photo Voltaic program, which includes the installation of 0.3 million solar street lights, distribution of 2.5 million solar study lamps and installation of solar power packs of a total aggregated capacity of 100-megawatt power.
- Sovereign Green Fund for Green Infrastructure
As part of the government’s overall market borrowings in 2022-23, Sovereign Green Bonds will be issued for mobilising resources for green infrastructure. The Sovereign Green Fund demarcated to renewable energy projects and the railways this year amounted to Rs 20,013 crore. Additionally, from 2017 to September 2022, 15 Indian corporates issued green bonds worth Rs 4,539 crore, most of which are related to renewable energy generation.
In conclusion, the Union Budget for 2023-24 has some positive moves for renewables, but the allocation of funds to the MNRE is still meagre compared to other ministries. The government needs to increase its allocation to the MNRE if it is serious about achieving its climate change commitments. Additionally, the government needs to take concrete steps towards reducing the country’s dependence on coal and transitioning to clean energy. The increase in off-grid solar projects and the issuance of Sovereign Green Bonds