Union Budget and Climate Concerns
The Union Budgets have increasingly reflected climate concerns since 2021, particularly during the COVID-19 pandemic period. Efforts began with ₹4,500 crore aimed at localising solar photovoltaic production to reduce reliance on Chinese imports.
Sectoral Focus in Budget 2026-27
- Five broad sectors received attention:
- Cement, steel, aluminium, and fertilizers.
- Decentralised solar power.
- Greening irrigation pump sets.
- Green hydrogen.
- Nuclear energy.
- A notable announcement was a five-year outlay of ₹20,000 crore for Carbon Capture, Utilisation and Storage (CCUS). This reflects India’s pilot phase rather than full-scale industrial deployment due to high costs.
CCUS technology is specifically relevant to sectors with emissions embedded in production processes. The EU’s Carbon Border Adjustment Mechanism (CBAM) will add carbon costs to imports of high-emission products, making decarbonising industrial production crucial for maintaining export competitiveness, especially for steel and aluminium.
Decentralised Energy and Schemes
- PM Surya Ghar Muft Bijli Yojana:
- Outlay increased to ₹22,000 crore in 2026-27 from ₹17,000 crore in the current year.
- Promotes decentralised energy systems that alleviate land pressure, transmission losses, and energy costs.
- Challenges include discom cooperation and securing upfront financing.
- PM-KUSUM Scheme:
- Allocations maintained at ₹5,000 crore.
- Revised estimates suggest higher-than-expected absorption.
Nuclear Energy and Other Initiatives
- Zero basic customs duty on nuclear plant equipment imports extended until 2035.
- Nuclear power faces challenges: high capital intensity, long construction timelines, and financing risks.
- Private sector participation remains uncertain due to security and liability concerns.
- Green hydrogen's budgetary support results in modest actual spending, indicating a gap between policy and execution.
Overall, India's climate budget for 2026-27 is characterized by ambitious intent, cautious allocations, and uncertainties in mobilizing private capital necessary for sectoral decarbonisation.
