Nirmala Sitharaman, India’s Minister of Finance, presented the highly-anticipated Union Budget 2023-24 to Parliament on February 1st, 2023. The budget was framed with the theme of “inclusiveness,” with a focus on uplifting the welfare of women, children, Scheduled Castes, and Scheduled Tribes with the overarching aim of India at 100 kept in mind.
In line with the government’s vision for a self-reliant India, the budget outlines seven key priorities, including inclusive development, transformative infrastructure, green growth, and the empowerment of the country’s youthful demographic. The budget aims to address the pressing needs of the nation while laying the foundation for sustainable, long-term growth and development. However, what is green growth? Explore and expand your understanding of the idea of green growth by accessing this article.
What is Green Growth?
Green growth, as a concept, pertains to an approach towards economic growth that prioritizes sustainable development and minimizes its adverse environmental effects. As per the 2022 Environment Performance Index, India placed 169th among 180 countries, which was based on the evaluation of parameters such as waste management, air quality, biodiversity and habitat, fisheries, ecosystem services, and climate change. Despite being the 5th largest economy globally, India’s ranking was lower compared to several smaller economies.
The World Health Organization conducted a study on air pollution among the G20 economies, revealing that 13 of the 20 most polluted cities were located in India. With India now being the world’s most populous country, it is depleting its finite resources such as minerals, water, and fossil fuels to meet the growing demands.
However, this excessive depletion of resources is bound to have severe adverse impacts on both the environment and the country’s economy. Environmental sustainability has become a formidable challenge in India’s path to sustained growth and development.
Relevance to Budget 2023
With this in mind, Minister of Finance Nirmala Sitharaman has declared that the Union Budget 2023-24 will concentrate on seven crucial areas, including green growth. A sum of Rs 35,000 crore has been allocated for prioritized capital investment in the shift towards green energy. The declaration was made in conjunction with India’s pursuit to promote decarbonization and expansion of sustainable energy sources. In the current budget, there has been a 48% increase in funding allocated to the renewable energy sector. Minister of Finance, Nirmala Sitharaman, proclaimed that the nation will concentrate its efforts on fostering green growth with the objective of decreasing carbon emissions and generating employment opportunities in the green sector.
Some insights on initiatives mentioned in the budget 2023:
- The National Green Hydrogen Mission has been established with an allocation of INR 19,700 crore to facilitate the transformation of the economy from relying on fossil fuels to utilizing green energy sources
- The government has pledged to decrease India’s estimated carbon emissions by 1 billion tonnes by the close of the current decade. Its goal is to achieve net-zero carbon emissions by 2070 and to reduce the carbon intensity of the nation’s economy by less than 45% by 2030
- It is expected that the upcoming budget will contain favorable announcements in the form of Production Linked Incentives (PLIs) to drive the domestic production of environmentally friendly and sustainable solutions later in the year
- In order to guide the economy towards a path of sustainable development, battery energy storage systems (BESS) with a capacity of 4,000 MWh will receive support in the form of viability gap funding (VGF), for which details will follow
- Regarding the initiation of a green credit program aimed at promoting positive environmental behavior, the Minister announced that such a program will be established under the jurisdiction of the Environmental Protection Act. This initiative is expected to augment environmentally conscious and responsible actions taken by companies, individuals, and local organizations.
Green Budget and Stock Market
The government has earmarked INR 19,700 crore for the development of a hydrogen-based economy in India. It is anticipated that the cost of electrolyzers, a key component in producing green energy, will decrease by half within the next three years, primarily due to the reduction in the cost of electricity, which is the primary expense associated with this technology. Consequently, the stocks of companies involved in green and renewable energy experienced significant growth as a result of this information. Inox Green Energy recorded an increase of 6.9%, Inox Wind exhibited a 5.8% rise, Gujarat Gas, a prominent player in Compressed Natural Gas, rose by 5.7%, and Borosil Renewables observed a surge of 8.79%. The budget is anticipated to be advantageous for the stocks of companies involved in the green energy sector, including ACC, Exide Industries, Amara Raja Batteries, Suzlon Energy, Solex Energy, Borosil Renewable, KPI Green Energy, Orient Green Power, Inox Wind, EKI Energy Services, Kotyark Industries, and Insolation Energy.
In conclusion, the concept of “green growth” pertains to a country’s endeavors to attain economic growth while safeguarding the environment and conserving natural resources for future generations. This encompasses the promotion of clean energy sources, decrease in pollution, enhancement of waste management practices, and preservation of biodiversity. The objective of green growth in India is to achieve a harmonious balance between economic advancement and environmental protection, thus fostering sustainable development.