economic survey

Environmental Funding | Budget 2018


Environmental funding in India would do well to heed the cautions of the Economic Survey. India performs among the bottom five countries in the Environmental Protection Index 2018 – a quantification of the environmental performance of a state’s policies – published by Yale and Columbia Universities along with the World Economic Forum. Its overall ranking of 177 out of 180 countries is particularly linked to its performance in environmental health policy and deaths due to air pollution. The Institute of Health Metrics and Evaluation (2016) estimates that out of all life years lost to environmentally related deaths and diseases, two-thirds were because of air pollutants (The Hindu, 2018). Environmental funding assumes much importance in such a scenario, where the right economic encouragement can move the policy establishment towards better environment-friendly policies.

Although the Economic Survey 2018 highlighted the risks from climate change, including a projected economic loss of 25 per cent in farm income in rain-fed areas in the medium term, the allocations to the Climate Change Action Plan or the National Adaptation Fund have not been changed in the Union Budget 2018. A special scheme was announced to subsidize machinery used in crop residue management that might help governments in Uttar Pradesh, Punjab, Haryana and Delhi/NCR in efforts to curb large scale stubble burning which is a big contributor to air pollution in Delhi. However, no large scale changes were introduced in the Budget 2018 that might encourage better environmental management (Datta, 2018).

A lack of interest in climate change mitigation efforts in policy can be extremely harmful given the continuous advance of climate change. Over the previous years the government in India has been successful in imposing taxes that help in protecting the environment. Ragini Bhuyan (2018) of Livemint analyzed budget documents to point out that the lack however, has been in utilization of proceeds from such taxes in fighting climate change. She points out that since most of these taxes were in the form of fuel taxes, given the rise in global oil prices there could be a political backlash in raising fuel prices further. This can reduce room to manoeuvre for the government in raising carbon taxes.

The 2015-16 Economic Survey had pointed out that raising taxes on the use of fossil fuels and automobiles can be a policy instrument in the battle against climate change. In a similar direction, carbon taxes had seen a sharp increase in India over the last few years. This was possible due to a fall in global oil prices in mid-2014. The rise in global oil prices can now work to the detriment on the imposition of carbon taxes and the economic encouragement of renewable energy sources.

The government has also failed in the aspects of utilizing proceeds from the cess on coal, introduced in 2010 by the UPA government. Although the succeeding NDA government raised it from Rs 50 per tonne in 2010 to Rs 400 per tonne in 2016, out of the total coal cess collections, only 34 per cent was transferred to the National Clean Energy and Environment Fund (NCEEF) in the period between 2011-12 and 2017-18. The government has also not efficiently utilized penalties taken from industrial projects that had used forest land (Bhuyan, 2018).

There needs to be an integrated framework that can utilize funds allocated for the environment so that policy can move forward in budgetary allocations and grow the economic sphere of activity in generating environmental funding. The integrated framework should be accompanied with infrastructure that can support the adequate utilization of environmental funding. For example, an extended irrigation framework can on one hand increase farmer’s income and with a bid to improve water utilization an infrastructural framework to reduce water wastage can also help in cutting expenditure and improve chances of generating more funding.

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