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Here’s What Budget 2016 Means for the Environment

This year’s budget brought some good news – and some bad news – for the environment.

3 min read
Here’s What  Budget 2016 Means for the Environment
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Rapid economic growth often comes at the expense of the environment. The industrial revolution, led by Europe and the United States largely contributed to global warming, and a fossil fuel-dependent global economy continues to exacerbate the problem.

In the last year, India’s economy grew by 7.6 percent, Finance Minister Arun Jaitley announced this morning in his Union Budget 2016 speech. In some cases this growth has been good news on the environment front, like growing investment in renewable energy, while in other cases it has come at the cost of forests and with the loss of clean air.

We had to work in an unsupportive global environment, adverse weather conditions and an obstructive political atmosphere.
Arun Jaitley, Finance Minister

Here’s look at some of the ways in which the budget affects the environment:

A traffic jam in Delhi. (Photo: Reuters)


To help deal with traffic and pollution in major Indian cities, Jaitley proposed a luxury tax of 1 percent on small petrol, LPG and CNG cars, a 2.5 percent tax on diesel cars of a certain size and a 4 percent tax on larger vehicles and SUVs.

Coal workers are going to be the most affected. (Photo: Reuters)

Fossil Fuels

For India’s economy to continue growing, the country will continue to rely on fossil fuels like coal for power generation. As part of this growth, the Finance Minister announced that the government will consider providing incentives to expand gas production from deep water and high pressure areas.

The Clean Energy cess on coal, lignite and peat has been renamed the Clean Environment Cess and has been raised from Rs 200 per tonne to Rs 400. Funds gained from these taxes can be used to further develop renewable energy, said Shirsh Garud, Director and Senior Fellow of the Energy and Enviornment Technology Development Division at TERI. “What we have seen in the past is that these funds are not easily used,” he added.

Farmers and labourers load harvested sugarcane onto a trailer in a field outside Gove village in Satara district, about 260 km south of Mumbai, 10 May2011. (Photo: Reuters)


Farmers across the country were repeatedly hit by natural disasters, from droughts to flooding – sometimes both. Climate change is expected to make these issues worse. This year, Jaitley allocated Rs 15,000 crore to reduce the burden of debt repayment faced by farmers.

He also laid out a plan to encourage organic farming. Five lakh acres allocated to organic farming over the next three years, with a budget of Rs 412 crore for organic farming-related schemes.

Solar panels installed at a solar plant in Guna district of Madhya Pradesh. (Photo: Reuters)

Renewable Energy

Last year Modi announced ambitious renewable energy targets of 100 GW of solar power by 2022 and 60 GW of wind energy over the same period. This financial year, the Ministry of New and Renewable Energy will receive Rs 5036 crore, up from Rs 262 crore in 2015-16.

Nuclear, an often controversial form of clean energy, will also benefit from the budget with Rs 3000 crore per year allocated to its development.

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Topics:  Arun Jaitley   Union Budget   agriculture 

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