28 January 2025 : The Hindu Editorial Analysis
1. The Union Budget as a turning point for climate action
(Source – The Hindu, International Edition – Page No. – 8)
Context |
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Focus on Climate Action Amidst Urgent Challenges
- With only five years left to meet India’s interim Net-Zero targets, the Budget must prioritize policies addressing climate change.
- Extreme weather events and global climate commitments necessitate immediate and decisive steps to protect vulnerable populations.
Past Achievements in Climate Initiatives
- The government has introduced impactful programs like the PM Surya Ghar Muft Bijlee Yojana, support for EV charging infrastructure, and funding for offshore wind energy projects.
- The National Green Hydrogen Mission received increased funding.
- India’s renewable energy capacity stands at 203.18 GW, far short of the 2030 target of 500 GW, requiring significant acceleration.
Key Priorities for the FY26 Budget
Strengthening the Green Energy Transition
- Review of PM Surya Ghar Muft Bijlee Yojana
- Despite 1.45 crore registrations, only 6.34 lakh installations (4.37%) have been completed, indicating major implementation gaps.
- Increased fiscal support should prioritize the Renewable Energy Service Company (RESCO) model to make solar energy affordable for low-income households.
- Expanding Solar Manufacturing
- Domestic production meets only 40% of solar panel demand, with local panels costing 65% more than imports.
- The Budget must expand production-linked incentives (PLI) for the solar module supply chain to address this gap.
- Renewable Energy Potential in Railways
- Indian Railways’ land and corridors could support up to 5 GW of solar and wind energy.
- Public-private partnerships should be encouraged to unlock this potential.
Addressing the EU Carbon Border Adjustment Mechanism (CBAM)
- The EU’s CBAM, effective January 2026, will levy carbon taxes of 20%-50% on $8.22 billion worth of Indian exports annually.
- MSMEs, contributing 30% to GDP and 45% to exports, face major risks.
- A dedicated ‘Climate Action Fund,’ similar to Japan’s Green Transformation Fund, can support decarbonization in vulnerable export sectors and build MSME capacity for CBAM compliance.
Carbon Border Adjustment Mechanism (CBAM) |
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Promoting a Circular Economy
- A circular economy could reduce greenhouse gas emissions by 44% and yield ₹40 lakh crore annually by 2050.
- The Budget should incentivize recycling and refurbishment through:
- A 150% weighted deduction on investments in recycling infrastructure.
- Accelerated depreciation benefits for circular economy assets.
- Establishing a sovereign green bond framework to finance circular economy projects is essential.
Enhancing Climate Resilience Through Insurance
- India’s insurance penetration dropped from 4% in FY23 to 3.7% in FY24.
- Tax deductions for insurance companies offering climate-linked policies and lower GST rates for such premiums can improve resilience.
Advancing Green Finance
- Standardized green finance definitions can attract a share of the ₹162.5 trillion required for India’s climate goals by 2030.
- Allocations should focus on creating a climate finance taxonomy, verification systems, and financial institution capacity building.
- Differential tax treatment for green investments can further catalyze progress.
Conclusion
- Climate policies are critical to maintaining trade and investment competitiveness.
- Integrating climate action into fiscal planning is key to meeting global sustainability standards and leveraging market opportunities.
PYQ: Clean energy is the order of the day. Describe briefly India’s changing policy towards climate change in various international fora in the context of geopolitics.(250 Words /15 marks) (UPSC CSE (M) GS-2 2022) |
Practice Question: How can the Union Budget FY26 strengthen India’s response to climate change through renewable energy, MSME support, and circular economy measures? (150 Words /10 marks) |
For more such UPSC-related The Hindu editorial analysis: –27 January 2025 : The Hindu Editorial Analysis