India’s 2015 Union Budget

India’s 2015 Union Budget

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Date: 15th April 2015
Type: Feature
Country: India
Tags: agriculture, greenhouse gas emissions, renewable energy, small and medium sized enterprises

CDKN’s Senior Country Advisor for India, Mihir Bhatt, assesses the degree to which India’s 2015 Union Budget will advance climate compatible development – and how CDKN will respond.

Green India

India is the fifth largest greenhouse gas emitter in the world and 70% of its electricity is produced from coal despite a large renewable energy potential (see more on CDKN’s India country page). This year’s Union budget speaks directly to the notion of ‘Green India’ and accepts that environmental degradation hurts the poor more than others. It commits to make India’s development process as green as possible.

India will continue to use coal – more coal – but will try to find ways to balance between taxing pollution and keeping energy prices low. To reduce emissions in cities, a scheme for Faster Adoption and Manufacturing of Electric Vehicles (FAME) is proposed. The budget has made initial outlay of 75 crore rupees (US$12 million) for this Scheme in 2015-16. Similarly, the Ministry of New Renewable Energy has revised its target of renewable energy capacity to 175,000 MW by 2022, comprising 100,000 MW Solar, 60,000 MW Wind, 10,000 MW Biomass and 5000 MW Small Hydro. What the budget does not have are green skills for the 59% of its population below 25 years in age. Here CDKN has an opportunity to help think ahead about green workers and professionals.

Micro-Small and Medium Scale Enterprises (MSMEs)

India is  home to a large number of MSMEs which are extremely vulnerable to natural and financial shocks. The budget states that ‘there are some 5.77 crore (57.7 million) small business units, mostly individual proprietors, which run small manufacturing, trading or service businesses. 62% of these are owned by people who belong to socially and economically backward classes such as the Scheduled Castes(SC), Scheduled Tribes(ST), and Other Backward Classes (OBC). These bottom-of-the-pyramid, hard-working entrepreneurs find it difficult, if not impossible, to access formal systems of credit. The budget has proposed to create a Micro Units Development Refinance Agency (MUDRA) Bank,  with assets of Rs.20,000 crore (US$3.2 billion), and credit guarantee budget of  Rs. 3,000 crore (US$480 million). The capital requirements of MSMEs will be better addressed with such provisions. Now how to turn these MSMEs green and clean so as to transform India’s development path? CDKN has global experience and knowledge to share with India.

The water-agriculture connection

Water and agriculture are inseparable. Climate change is already affecting sources of fresh water and the availability of irrigation water. Land degradation and a shift in weather patterns has started affecting agriculture in India. Since, over half of Indian population depend on agriculture for their livelihood, changes in climate make the country extremely vulnerable. The budget has made allocation of `Rs.5,300 crore (US $ 849 million)to support micro-irrigation, watershed development and the Pradhan MantriKrishiSinchaiYojana (PMKSY). The PMKSY is the central government's irrigation scheme that aims at bringing irrigation water to every village by converging ongoing schemes being implemented by various ministries.Therefore, organic  farming and water harvesting on farms to achieve “Per Drop More Crop” are high on the government agenda. CDKN has supported initiatives, research, and offered technical assistance across many countries for better and wiser use of water.

Opportunities missed in the Union Budget

Analysis of the budget shows that the budget has tried to address as many areas as possible that are important for green economy and growth. However, certain key areas have been missed out such as “equal emphasis on adaptation and mitigation, adequate insurance cover for crop damage and better disaster preparedness to cope with extreme weather events.”. Similarly, the budget has missed out on the opportunity for building resilient cities as the concept of ‘Smart Cities’ find no mention in the budget.

CDKN’s programme in India – next steps

India is a priority partner country for CDKN and the just-presented  Union Budget of 2015 gives reasons for deeper engagement. CDKN projects in the recent past have made a meaningful contribution to India’s climate change efforts in terms of strengthening policies and practice on climate compatible development at national as well as state level. CDKN work on strengthening implementation of the State Action Plans on Climate Change (SAPCCs) and climate-smart disaster risk management has been innovative and timely. CDKN is also helping India shape appropriate policies based on scientific evidence from research and listening to people on the ground.

Where the Union Budget leads on climate compatible development, CDKN is poised to support: CDKN’s research and technical assistance programmes can help in the design and delivery of climate-smart agriculture systems, and the wise use of water in a changing climate. In skilling-up the country’s young people to take the mantle of climate compatible development and demonstrating the constructive role of MSMEs in a climate-compatible future, CDKN has a role. And where the Union Budget falls short in addressing the opportunity to develop Smart Cities for India’s burgeoning urban population, CDKN research and technical assistance may will lead the way to shared green prosperity for all.

Visit our list of CDKN projects to find how CDKN is already contributing across many facets of climate compatible development in India, and get in touch to explore how we might work together:


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