Analysis of Union Budget 2019 vis-a-vis Environment
The “Budget for New India” or the Union Budget for 2019-20 was presented on the 5th of July, 2019 under the present Finance Minister Hon’ble Smt. Nirmala Sitharaman and Hon’ble Minister of State for Finance Shri. Anurag Singh Thakur. Ahead of this budget came the Economic Survey for 2018-19, prepared by Chief Economic Advisor KV Subramanian, which gave an idea of the economic progress of the country as well as policies in the previous financial year. The budget included the achievement of “pollution free India with green Mother Earth and blue skies ” within the ten-point vision for the decade. The article will try to analyse the budget in the light of the need for environmental action.
Availability of clean water and sanitation has been a major sustainable development goal. To achieve this goal, Namami Gange mission was launched in the period of 2015-2020 with a budget outlay of Rs.20,000 crore. National Mission for Clean Ganga was established under Environment (Protection) Act, 1986 for better implementation of the mission. Rs. 6,106.25 crore has been spent till now, which is projected as a huge leap in the mission. This financial year, the budget talked about the establishment of Jal Shakti Mantralaya by integrating the Ministry of Water Resources, River Development and Ganga Rejuvenation and Ministry of Drinking Water and Sanitation. Government plans to use funds available under Compensatory Afforestation Fund Management and Planning Authority (CAMPA) to provide water supply to every household.
These steps give rise to two points of criticism. First, the focus is not primarily to clean Ganga but it is incidental to provide clean drinking water and sanitation. This implies that the mission for Clean Ganga will be implemented only to a limited extent. Second, though there is a surplus available in the CAMPA fund, it has failed to fulfil the purpose for which it was established ,i.e., afforestation of non-forest land. Diverting those funds to the remote purpose of providing clean drinking water, which does not prima facie promote environment protection, is a hurdle to CAMPA and at the same time, speaks a lot about the attitude of the government towards environment. Despite resorting to CAMPA, government can consider other innovative methods of raising funds like micro-financing, crowd funding and concessional loans.
Swachh Bharat Mission (SBM)
SBM, started in 2014, has achieved a major feat as per the figures, which says that 9.6 crore toilets have been constructed and 5.6 lakh villages and more than 95% cities have become Open Defecation Free. It was reported that India will become Open Defecation Free by 2nd of October 2019. Also, there are one crore downloads of Swachhata App and 45,000 public toilets were uploaded on Google maps. According to Word Bank, lack of sanitation had an impact of 6.4% of GDP in 2006. UNICEF and Ministry of Drinking Water and Sanitation in their study showed that SBM has helped to prevent contamination of water, soil and food. The Economic Survey 2018-19 suggested that there is a need for 100% disposal of solid and liquid waste for which, scientific techniques could be developed. Following this, the present budget highlighted the need of converting waste into energy, thereby expanding SBM to include ‘sustainable solid waste management’.
However, there seems to be no provision for additional allocation of funds for waste management as waste to energy plants are not really viable for a country like India. Cost of energy from processes like combustion and gasification are a lot higher than other sources of energy. Moreover, the toxic emissions add to the pollution levels. Defecation fields could be the best possible way to manage the waste under SBM because even if it does not create energy, the harm done to the environment would be lesser and also, this method is comparatively feasible. Importance of sustaining behavioural change in people towards using toilets is pressed upon in the Economic Survey, like training of field agents, motivation of “agents of change”, appointment of sanitation ambassadors etc. Though the budget only gives a passing reference to behavioural change, it remains an important element because constructions are of no use when people are not ready to change their habits.
Energy efficiency takes place when lesser amount of energy is used to produce the same amount of output. It has improved in 2018-19 as overall electricity savings was 7.21% of net electricity consumption in 2017-18. Also, thermal energy saved is 2.7% of net thermal energy consumption and 2% of net energy supply during 2017-18. Energy Conservation Act, 2001 was enacted to achieve this goal, through which a body called Bureau of Energy Efficiency (BEE) was created. Many schemes were taken by government with BEE like UJALA, Demand Side Management scheme for DISCOMs, Corporate Average Fuel Efficiency, etc. To realise the potential in energy efficiency further in coming years, the Economic Survey suggested the inclusion of favourable regulatory framework, better institutional framework and financing, increasing stakeholders and use of technology. The budget of 2019-20 stated that 35 crore LED bulbs have been distributed so far under UJALA scheme to replace incandescent lights with CFL, resulting in annual saving of Rs.18,341 crores. It has proposed to use the approach of this scheme to promote the use of solar stoves and battery charges. Using solar stoves and battery charges would imply use of renewable energy but it has to be understood that replacing coal as a source of thermal power is impossible as they are convenient and the supply is certain. Renewable sources need better infrastructure to avoid intermittency. Furthermore, the disparity in access to energy in urban and rural areas raises concerns, as some traditional sources exacerbate pollution. Under Ujjwal DISCOM Assurance Yojana (UDAY), the cross-subsidy charges, undesirable duties on open access sale or captive generation for industrial and other bulk power consumers are proposed to be removed in 2019-20 budget.  Though UDAY aims at reduction of cost of power generation while promoting renewable energy and energy efficiency, it focuses on the reduction of cost of coal as a source of energy but no other renewable sources. India’s thermal power is based on coal and 60% of India’s installed capacity is in thermal power.
Use of renewable energy is linked with the promotion of energy efficiency. Generation of energy from renewable sources has increased from 6% in 2014-15 to 10% in 2018-19. India also aims to achieve 40% power capacity from renewable sources of energy. Zero import duty on solar panel components was announced in 2018 budget. In the budget of 2019-20, customs duty is removed on all forms of uranium ores for generation of nuclear power which was 2.5%. Similarly, custom duty on uranium rich in U-235 and its compounds,plutonium and its compounds, etc. is removed which was 7.5%. Custom duty is also removed from those goods required for setting up nuclear power plants under projects like Chutka Atomic Power project, Gorakh Atomic Power project, Kaiga Atomic Power project and MahiBanswara Atomic Power project. However, the tariffs were very high for hydro energy in 2018-19 due to which, it is yet not utilised properly in India despite of its environment friendly nature. Tariff rationalisation measures are taken for the same now. Promoting the use of alternative sources also depends on the willingness of the people to use them and only factor which stops them is cost. Budget 2019-20 fails to foresee this angle where subsidies could be game changing. As said by Nobel Laureate, Abhijit Banerjee: “You don’t boost growth by cutting taxes, you do that by giving money to people.”
In the agricultural sector also, resource efficiency is a major concern when it comes to irrigation and use of fertiliser. Almost 89% of groundwater extracted is used for irrigation as per Asian Water Development Outlook, 2016. Government considers Micro-irrigation system as a method of saving fertiliser and energy but it does not seem practical any sooner because of the high cost associated with them, which can be afforded by few farmers. Current budget doesn’t tend to allocate any sum towards this method. Soil fertility has stopped responding to additional fertilisers due to lack of efficiency, thereby requiring a shift to organic farming. Schemes like Zero Budget Natural farming have been successful so far in implementing environment friendly farming. But, majority of the population still prefers to buy non organic products due to their cheaper rates in comparison to organic products. Government needs to subsidise the rates to promote organic farming in holistic manner for which, 2019-20 budget currently don’t provide for.
Electric Vehicles (EVs)
Transport sector was detected to be second largest producer of CO2 and 90% of this CO2 was contributed by road transport. Also, India heavily depends on petroleum products import which is defeating energy efficiency goals. National Electric Mobility Mission Plan 2020 and FAME were launched to increase the sale of EVs. Rs.795 crore was disbursed towards FAME in 2014 for two years. However, the program was extended and now, it has entered FAME India Phase 2 with disbursement of Rs.10,000 crore for three years. Budget for 2019-20 mentions 1st April, 2019 as the commencement date of Phase 2 and it intends to introduce EVs in public transport. Sale of electric two wheelers was comparatively more than electric cars in 2018. The budget also aims at increasing the purchase through incentives while improving the infrastructure for charging and solar batteries. To reduce the cost for consumers, the government has moved the GST council to reduce the GST to 5% from 12% on electric vehicles and if loans are taken to purchase EVs, Rs. 1.5 lakh will be deducted as additional income tax on the interest paid on loans. Also, customs duty will be exempted for certain EV parts while it is increased for automobile and its parts. India aims to become the global hub of manufacturing EVs but as a matter of fact, China is already leading and is about to become a hub for EVs. Even India imports its EVs parts from China. Moreover, even if India has provided good amount of incentives, people may not want to purchase EVs because of the inconvenience associated with battery charging. Lithium and Cobalt used in batteries are not sufficiently found in India because of which, either they are imported or the batteries. Again, China leads here because it has purchased all the major mines rich in raw materials to make batteries. Furthermore, given the fact that India will have to import batteries or raw materials for batteries or EV parts or even EVs themselves, problem of petroleum products import becomes irrelevant because in either way, India in relying heavily on imports and has nothing of its own except cheap labour.
Climate Change & Air Pollution
Government launched National Air Quality Monitoring Programme to target certain pollutants. Later, various actions for mitigation were taken under Air (Prevention and Control of Pollution) Act, 1986 along with Graded Response Action Plan for Delhi. For 2019-20, NCAP is launched to bring down the pollution in the whole of India in a fixed period of time. Ministry of Forest, Environment and Climate Change has launched this plan with budget allocation of Rs.150 crore. NCAP aims to reduce PM2.5 and PM10 concentration by 20-30% by 2024. To solve the problem of climate change, National Action Plan on Climate Change came in 2008 followed by State Action Plans. Climate Change Action Programme came with total disbursement of Rs.290 crore in 2014. Budget outlay was Rs.132.40 crore for three years till 2019-20. Availability of funds is still a challenge and budget 2019-20 is silent on anything new about revising or extending the old outlay.
The 2019-20 budget allocation to Ministry of Forest, Environment and Climate Change is Rs.2954.72 which is comparatively higher than the last fiscal year. Though the budget had some new features like EVs, it still failed to address some issues of urgency. If we take plastic ban for example, the government aims to put a blanket ban but doesn’t allocate any funds towards encouraging the use of alternatives. Recent floods all over the country point towards the need of additional funds for restoration and mitigation plans but budget remains silent on that point. All the allocations under SBM are to make India Open Defecation Free, thereby limiting the essence of SBM to not include solid waste management which is a daunting issue. Even in schemes which were already covered by budget 2018-19 like Ganga Rejuvenation, the 2019-20 budget has shifted its focus from environmental concerns to providing clean drinking water. The total allocation for environment protection is still lower when compared to other sectors like police under Ministry of Home Affairs. All this highlights the need to change the attitude where environment is still not a major point of concern.
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This blog is a part of the RSRR Blog Series on Environmental Law . By Ritu Pipraiya, Student, National Law Institute University, Bhopal.