A symbolic budget
12 July 2014 10:17 PM GMT
I do not want to be too critical of this budget, as the finance minister (FM) is new: he has not even completed two months in office. However, I do want to point out some issues that I believe would be important to consider in future. It is a budget where all the right words have been used, but neither have the programmes been well thought out and conceived nor have sufficient funds been put on the table to take the programmes forward. I will use a few examples to illustrate this.
Take the case of renewable energy. The FM in his speech has used the terms ‘renewable energy’, ‘solar energy’ and ‘wind energy’ many more times than the word ‘coal’. This is a welcome departure from the past. While describing new and renewable energy as a priority for the government, he has announced programmes like setting up of four Ultra Mega Solar Power Projects and 1,00,000 solar power pumps that can deliver drinking water as well as water for irrigation. In addition, he has announced setting up of 1-MW solar parks on the banks of canals. To promote manufacturing of renewable energy equipment like solar PV cells and modules and wind turbines, he has also announced tax exemption on imported components. The size of the National Clean Energy Fund (NCEF) will now more than double as the cess on coal (which capitalises NCEF) has been increased from Rs 50 to Rs 100 per tonne.
But is the package on renewable energy a new departure from the past? No. In fact, these are the same ‘disjointed’ schemes promoted by the erstwhile UPA government. In addition, the FM has not put enough money on the table for these programmes. I believe that the FM can do better. In this budget, he has announced the ‘Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY)’ to provide 24X7 electricity to all households in villages. He can marry DDUGJY with the renewable energy scheme to achieve his rural electrification and renewable energy goals, together. Instead of setting-up 16,000 MW worth of ultra mega solar energy plants at four locations, he can set up 20,000 solar plants of 0.5 MW each with the same money.
These mini-solar plants can provide at least one unit (1 kWh) of electricity to 40-50 million households per day or half of those without electricity in rural India. On top of this, he can also integrate the 1,00,000 solar pumps scheme with DDUGJY to supply clean drinking water to villages and for irrigation. In a nutshell, the FM can turn the DDUGJY into a truly renewable energy-based energy access programme by converging and Modifying the schemes announced in the budget. This will change the face of rural India. As far as money is concerned, the FM can use the funds from NCEF to do all this and more. This will be the most legitimate use of the NCEF funds.
The FM has also given indications on what his government is thinking about for the mining sector. He mentioned changes in the Mines and Minerals (Development and Regulation) Act, or MMDR Act, 1957 and revision of royalties to give more resources to the state governments. The previous government had spent seven years on revising the MMDR Act. A new Act (MMDR Bill, 2012) was also introduced in Parliament, but was allowed to be lapsed – the main reason was opposition from the mining industry. The fact is mining companies in India have a very poor social and environmental performance record. Most mining regions are not only poor, they are also critically polluted. In addition, the level of illegality and corruption is incomparable. In such a scenario, the MMDR Bill, 2012 had many proactive provisions to improve the social and environmental status of the mining areas. These included a provision to share benefits with local communities and many provisions on ‘sustainable mining practices’. The industry fought tooth and nail to oppose these. I believe that the government should approach the revision of the MMDR Act, 1957 in a much more comprehensive fashion to make mining acceptable to the society. Presently, most communities do not believe that mining benefits them.
It is for the first time that the government has acknowledged climate change adaptation as an important issue and the FM has allocated Rs 100 crore for it. But the fact is, there has never been a debate in the country on what do we mean by the term ‘climate change adaptation’. How is this adaptation different from ‘good development’? Or, do we need a separate programme for adaptation or should adaptation be mainstreamed into all policies and programmes? I believe, the prime minister and the FM should ask these questions next time around. I will end by saying that the FM has his heart at the right place. He now needs to develop coherent programmes that can deliver results on the ground. We should give him time to do this.
By arrangement with Down to Earth magazine
Take the case of renewable energy. The FM in his speech has used the terms ‘renewable energy’, ‘solar energy’ and ‘wind energy’ many more times than the word ‘coal’. This is a welcome departure from the past. While describing new and renewable energy as a priority for the government, he has announced programmes like setting up of four Ultra Mega Solar Power Projects and 1,00,000 solar power pumps that can deliver drinking water as well as water for irrigation. In addition, he has announced setting up of 1-MW solar parks on the banks of canals. To promote manufacturing of renewable energy equipment like solar PV cells and modules and wind turbines, he has also announced tax exemption on imported components. The size of the National Clean Energy Fund (NCEF) will now more than double as the cess on coal (which capitalises NCEF) has been increased from Rs 50 to Rs 100 per tonne.
But is the package on renewable energy a new departure from the past? No. In fact, these are the same ‘disjointed’ schemes promoted by the erstwhile UPA government. In addition, the FM has not put enough money on the table for these programmes. I believe that the FM can do better. In this budget, he has announced the ‘Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY)’ to provide 24X7 electricity to all households in villages. He can marry DDUGJY with the renewable energy scheme to achieve his rural electrification and renewable energy goals, together. Instead of setting-up 16,000 MW worth of ultra mega solar energy plants at four locations, he can set up 20,000 solar plants of 0.5 MW each with the same money.
These mini-solar plants can provide at least one unit (1 kWh) of electricity to 40-50 million households per day or half of those without electricity in rural India. On top of this, he can also integrate the 1,00,000 solar pumps scheme with DDUGJY to supply clean drinking water to villages and for irrigation. In a nutshell, the FM can turn the DDUGJY into a truly renewable energy-based energy access programme by converging and Modifying the schemes announced in the budget. This will change the face of rural India. As far as money is concerned, the FM can use the funds from NCEF to do all this and more. This will be the most legitimate use of the NCEF funds.
The FM has also given indications on what his government is thinking about for the mining sector. He mentioned changes in the Mines and Minerals (Development and Regulation) Act, or MMDR Act, 1957 and revision of royalties to give more resources to the state governments. The previous government had spent seven years on revising the MMDR Act. A new Act (MMDR Bill, 2012) was also introduced in Parliament, but was allowed to be lapsed – the main reason was opposition from the mining industry. The fact is mining companies in India have a very poor social and environmental performance record. Most mining regions are not only poor, they are also critically polluted. In addition, the level of illegality and corruption is incomparable. In such a scenario, the MMDR Bill, 2012 had many proactive provisions to improve the social and environmental status of the mining areas. These included a provision to share benefits with local communities and many provisions on ‘sustainable mining practices’. The industry fought tooth and nail to oppose these. I believe that the government should approach the revision of the MMDR Act, 1957 in a much more comprehensive fashion to make mining acceptable to the society. Presently, most communities do not believe that mining benefits them.
It is for the first time that the government has acknowledged climate change adaptation as an important issue and the FM has allocated Rs 100 crore for it. But the fact is, there has never been a debate in the country on what do we mean by the term ‘climate change adaptation’. How is this adaptation different from ‘good development’? Or, do we need a separate programme for adaptation or should adaptation be mainstreamed into all policies and programmes? I believe, the prime minister and the FM should ask these questions next time around. I will end by saying that the FM has his heart at the right place. He now needs to develop coherent programmes that can deliver results on the ground. We should give him time to do this.
By arrangement with Down to Earth magazine
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