Union Budget 2015: Arun Jaitley talks about green development, cuts allocation for environment ministry

NEW DELHI: The finance minister on Saturday stressed on the need to tackle environmental degradation — in the Budget, he doubled the clean energy cess on coal, made a token allocation for electrical vehicles and exempted effluent treatment plants from paying service tax.

However, Arun Jaitley cut the allocation of funds for the Ministry of Environment, Forests and Climate Change to Rs 1,681.60 crore from Rs 1,764.60 crore in the ministry’s revised estimate for 2014-15. The same holds true for the Ministry of Water Resources, though the Clean Ganga programme, which is among the Prime Minister’s priority projects, received a higher allocation. Additionally, contributions to the Clean Ganga Fund, which is being set up, will qualify for 100% tax deduction.

The environment ministry’s wish-list had included tax and other fiscal incentives for pollution abatement. India’s air quality has become an issue of international discussion, and water pollution is a rising concern. While the Budget meets only a part of this demand, there is an increase in the allocation for prevention and control of pollution: to Rs 240.30 crore from the revised estimate of Rs 96.77 crore in 2014-15.

The allocation covers grants-in aid to central and state pollution control boards, which are responsible for addressing issues of air pollution, and for promoting the use of common effluent treatment plants. This higher funding ties in with the government’s order making it compulsory for industries to provide for online and continuous monitoring of stack emissions (into the air) and liquid discharge. In his Budget speech, Jaitley stressed that as “environmental degradation hurts the poor more than others, we are committed to make our development process as green as possible”.

While India’s “de facto ‘carbon tax’ on most petroleum products compares favourably with international norms”, he said on coal, “there is a need to find a balance between taxing pollution, and the price of power”. Nevertheless, he doubled the cess on coal to Rs 200 per tonne. Indications are that the government might take additional measures later in the year, once it takes a final call on the recommendations of the TSR Subramanian committee’s report, which suggests the use of market mechanisms to tackle pollution.

Renewable energy remains a key component of the government’s green plans — the targets have been revised upward. The aim is to take capacity to 1,75,000 MW by 2022, comprising 100,000 MW of solar, 60,000 MW wind, 10,000 MW biomass and 5,000 MW small hydro.

The National Adaptation Fund, announced in the July 2014 Budget, has been allocated Rs 160 crore. This though is not adequate for the country’s adaptation challenges it is line with the ministry’s demand. The fund can be leveraged to access funding from other sources as well.

Allocation for Project Tiger has been reduced to Rs 136.46 crore from Rs 161.02 crore in 2014-15 — this comes after a 30% rise in the tiger population reported in January.

Even though Environment Minister Prakash Javadekar lists “more green” as one of the aims of the government, the allocation under the Green India Mission is limited to Rs 64 crore. This could well be in anticipation of the use of the Rs 38,000 crore that have been collected as part of the compensatory afforestation fund, CAMPA.