A budget for inclusive and sustainable growth

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Even though many proclamations and agreements declaring sustainable developments, the mainstream economists are still vying for “grow first and clean up later.”

After the pandemic induced crisis in FY21, India is once again back on the growing economy table, with estimates placing the FY22 rate between 8.5%-9.2%. But this growth has many problems.

Many leaders might have declared green development, but the economists are still focusing on unsustainable development with no intention of change. Government intervention is needed for achieving clean energy.

One of the first places for demand-side intervention is the Ujjwala scheme. By this scheme, 85% of households had an LPG connection by March 2020 as clean cooking energy.

But according to CEEW’s India Residential Energy Survey, 53% of households still use traditional solid fuels/biomass.

The reason for this is LPG refilling has become 50% more expensive. Subsidies should be introduced for connections under this scheme, which will reduce the refiling costs.

Another place for demand-side is in promoting energy-efficient ceiling fans. Ceiling fans take up a fourth of residential power use.

As more and more houses get electricity, the ceiling fan market grows by 11-12% annually, more than double the global average.

But out of this huge market and consumer base, only 3% use energy-efficient ones. To increase it, GST has to be reduced from 18% to 5%. This alone could stimulate demand for 4 million fans.

This would reduce the carbon footprint and the electricity bills by ₹500 per year for a household. With lower power consumption, it will reduce the electricity subsidy burden of the state governments.

On the supply-side, for the nation to reach 450 gigawatts of renewables capacity by 2030, India needs $200bn (₹149tn) to reach it. Domestic banks and NBFCs do not have the space to lend in this debt-heavy infrastructure.

The Climate Credit Enhancement Fund of ₹10,000 crores, which is spread over five years, could help sustainable developers to get greater access to the domestic bond market. It will also reduce the risk for bond issuers.

Another space for sustainable investment is bioenergy. Many gigawatts of power can be produced, with tons of biomass that have the potential for Bio-CNG production. A national policy on bioenergy will boost it.

This could help feedstock and supply chain management, market creation, bioenergy accelerator fund, quality control and performance monitoring.

Every ₹1 crore subsidy for a compressed biogas plant will return socioeconomic benefits worth ₹9 crores annually.

Another sphere is green hydrogen. It can be used across many industrial sectors and can also increase energy security for India. It can be done only with government support, such as investment.

The list goes on, including sustainable cooling, rural infrastructural and sustainable development, expansion of bus fleet with e-buses, and insurance protection for infrastructure damaged by natural calamities.

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