Union budget 2025: What does it mean for climate action?

The budget delivers on supporting the energy transition, but doesn’t do much for other critical pillars of climate action such as adaptation, conservation, agriculture, pollution, or built envt

In a budget charting out India’s vision towards becoming “Viksit Bharat”, the words ‘sustainable’, ‘ecologically balanced’, ‘low-carbon’, ‘climate - resilient’, ‘biodiverse’ don’t feature once. And that should tell us something. But one may argue that one shouldn’t judge a book by its cover. So let’s dig in and review the outlays and plans outlined in the budget for some of the most critical areas of climate action - energy transition, transport, agriculture, water, biodiversity, and adaptation.

Here we go -

1. Energy transition

   • Nuclear energy

     • Massive push for Nuclear energy with an outlay of INR 20,000 cr and a stated goal to achieve 100 GW capacity by 2047 (More than 15X the current installed capacity of 6.7 GW)

     • Measures to bring in private sector by the amendment of the Atomic Energy Act and the Civil Liability for Nuclear Damage Act

     • It will also bring focus on small nuclear reactors.

   • Solar energy

     • Rooftop solar gets a boost with an allocation of INR 20,000 cr (up 80% from INR 11000 cr last year) through the PM Surya Ghar Muft Bijli Yojana

     • Domestic manufacturing of solar PV cells and grid scale batteries to be supported under the National Manufacturing Mission (Make in India)

   • Fossil fuels

     • While there is a push for nuclear and solar, the budget for the ministry of petroleum and natural gas also saw an increase of 20% from the budget estimate for FY 25 (Budget for FY 26 is INR 19,000 cr up from FY 25 estimate of INR 16,000 cr)

2. Electric vehicles - Several measures that support the domestic manufacturing of electric vehicles and bring down cost of manufacturing to make it economically more viable

   • Critical minerals - Removal of basic custom duty on several critical minerals that are needed in the manufacture of EV batteries and cars

   • Reduced import duty on battery manufacturing equipment

   • Domestic manufacturing of EV batteries, motors and controllers to be supported under the National Manufacturing Mission (Make in India)

   • Deployment of electric buses across cities - PM e-bus SEWA scheme with an allocation of INR 1300 cr (from 500 cr) and PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme with an allocation of 4000 cr (from 1800 cr) to boost electric bus adoption for public transport

3. Agriculture - In the context of climate change, agriculture is a highly impacted and at risk sector. Many crops are at risk of reduced yields due to the changing climate and extreme weather events. While the budget starts with agriculture, calling it the first engine of development it’s rather silent about measures to protect against climate change. The only climate change related points were:

   • A national mission on high yielding seeds where one of the criteria was to develop ‘climate resilient’ seeds, including seeds for pulses.

   • What’s missing - Measures on agro-ecology, natural farming, protection against damage to crops from extreme weather events, measures for sustainability of water for farming, management of agricultural waste (in relation to crop burning)

4. Water

   • The water ministry has a significant outlay of INR 99500 cr. Of this 68,000 (~70%) cr is towards the Jal Jeevan mission that aims to have a drinking water connection in every rural household.

   • However, the budget doesn’t say anything about the real issue of water scarcity. India is already facing water scarcity and this is expected to become worse. While the Jal jeevan mission is building the pipes to take water to every house, what’s missing is measures to ensure water keeps flowing through those pipes.

   • What’s missing: Measures to ensure long term water availability by prioritising

     • Source sustainability (aquifer mapping, groundwater recharge)

     • Recycling of waste water followed by secondary use

     • Demand side interventions to reduce water consumption

   • The budget continues to have an allocation of INR 2400 cr for the highly debated and controversial river interlinking project

5. Adaptation

   • Adaptation is clearly understood as an important piece in climate action - even by the government. In fact the Economic survey that was released a day before the budget highlights the criticality of adaptation in a chapter titled ‘CLIMATE AND ENVIRONMENT:ADAPTATION MATTERS’

   • What is adaptation?

     • Some impacts of climate change are already locked in. The warming that we have caused due to the actions in the past will result in extreme weather events in the coming future that we cannot avoid.

     • Mitigation refers to steps we can take to reduce future impacts of climate change. Adaptation refers to the steps we need to take reduce vulnerability to climate change impacts that are locked in.

   • The Economic survey re-iterates that India is ranked 7th in the list of countries most vulnerable to climate change and in 2022 more than 5% of its GDP went into adaptation expenditure.

   • However ironically, the budget does not indicate any specified outlay towards adaptation or protection from extreme weather events

   • The only new scheme is ‘Mission mausam’ which is aimed at building a better weather prediction system for India. While weather prediction is important in mitigating losses by early warnings, adaptation efforts need to go far beyond that. This could include initiatives for cooling in extreme heat, crop damage risk, disaster management etc.

6. Biodiversity (Conservation and restoration)

   • There’s no significant mention of anything related to biodiversity or conservation and restoration

   • The allocation to the Ministry of environment and climate change has remained at around INR 3400 cr, a measly 2.5% increase from last year!

   • What’s missing - Measures on habitat protection, urban biodiversity, protection of ecologically sensitive areas.

7. Air quality

   • Air quality is not a new issue. We have been talking about Delhi’s dismal air quality for years, but now other cities such as Mumbai have also joined the race. There have been countless studies on its impact on health as well as analysis of what it can be attributed to.

   • The Economic survey also recognizes ‘Air pollution’ as a major problem, though it restricts its comments to Northern India.

     • “Air pollution is a concern for the people of the northern part of

       India, especially Delhi and NCR, during the transition months from autumn to winter when pollutant levels frequently exceed the WHO guidelines”

   • However, air quality features in the budget only in terms of doubling the allocation to the CAQM (Commission for Air Quality Management) from 16 cr to 32 cr

   • Some other schemes and programs such as the boost to electric vehicles, move away from fossil fuels for electricity generation, moving away from burning of waste under the Swachh Bharat Mission may help in improving air quality, but their potential impact has not been quantified.

   • Further construction which is a major factor impacting air quality in all metros is likely to continue unabated or increase given the infrastructure projects planned and budgets allocated.

Other lost opportunities

There are a few other areas that are critical in our journey to address climate change but find no significant mention in the budget -

• Climate finance taxonomy - Last year’s Union Budget 2024-25 announced the government’s intention to develop a climate finance taxonomy—a crucial step in aligning financial flows with India’s sustainability goals. However, it continues to be missing from the current budget. The taxonomy is important to ensure that finance for climate mitigation and adaptation is channeled effectively and to protect against greenwashing.

• Industrial decarbonization (beyond energy) - Industrial decarbonization refers to reduce the carbon footprint of industries such as steel, textiles or FMCG. Measures here can include process optimization, use of alternate fuels, electrification, carbon capture, circular processes etc. While this is an area that will have to see action led by industry, there is potential for a push from the government that nudges industry towards it or accelerates adoption through taxes or subsidies

• Built environment - India is a growing country and is still getting built - buildings, roads, flyovers, railways tracks! India will need to find and choose ways to do this in a low carbon and sustainable manner.

• Urban challenge fund - The budget announced an Urban challenge fund with an allocation of INR 10,000 cr for this FY focused on developing ‘cities as growth hubs’. This was a great opportunity to ensure that cities develop in a way that is sustainable and balances ecology, but such wording was completely missing.

While the Union Budget demonstrates a clear commitment to energy security through the massive push for nuclear and solar, it falls short of delivering a comprehensive climate action strategy. The singular focus on energy transition, though important, overlooks other pillars of climate mitigation beyond energy and almost completely misses adaptation and resilience. The limited attention to climate-resilient agriculture, forest conservation, water security and air pollution could leave vulnerable communities exposed to mounting climate risks.

The budget serves as a mirror of the government's stance on climate change—embraced as a talking point when it aligns with mainstream ideas of growth and security, yet swiftly sidelined as a future concern the moment it demands trade-offs in the face of ‘more urgent’ problems.