CSE MEDIA ALERT: Budget 2013-14: An analysis from the environment-development perspective

February 28, 2013

CSE director-general Sunita Narain unpacks the Budget

Good news: increased allocation for agriculture, watershed development -- but we need effective implementation
The recognition that small and marginal farmers need investment in improved land productivity and water use is a critical component of the budget. In the past five years (2007-08 to 2011-12), the country has spent some Rs 7,000 crore (against a target of Rs 10,000 crore) for development of 15.13 million hectare (ha) of land. But as the 12th Plan draft document suggests, there is a strong case for reform in the implementation of the programme. It would have been good if the finance minister (FM) had demanded more effective working as he provided more money. The crippling drought in Maharashtra tells us that these funds are not used for what they are provided – building ecological assets to regenerate village economies and provide water security. More money is not the only answer here.

Sustainable and ecological growth only a mantra, not a mandate
The “mool mantra” of Budget 2013 is inclusive and sustainable development, says the FM. But the fact is, there is no substance in the Budget which tells us how the directions of growth will be environmentally sound. Instead, the FM talks about the Cabinet Committee on Investment, which has been set up to fast-track clearances. There is no indication in the speech that this drive for investment will be cognisant of the need for sustainability and will strengthen, not weaken, the regulatory system that governs green clearances.

Environment reduced to waste technologies that don’t work
The FM says he will evolve a scheme to encourage cities to take up waste-to-energy projects in PPP mode. Clearly, this shows his complete lack of understanding of the garbage that is drowning our cities. The fact is that waste-to-energy plants, however much a good idea, have not worked in the country. These plants require good segregation; high calorific value of waste and careful monitoring to ensure that there is no emission of dioxins and other toxins because of burning plastics. What we need instead is waste management strategies which encourage segregation; recycling and reuse. What is needed is to incentivize municipalities that can segregate, recycle and reuse waste, not build white-elephant waste plants. But clearly, that does not suit the technology-fixated mindset. Now these funds will push another round of bad projects, which will create more problems than solve existing ones. In my view, the FM should have left the subject of environment alone as his understanding of what we need is outdated and myopic.

Generation-based funds for wind power is the way ahead…
There was a fear that the FM would succumb to pressure from wind energy producers, particularly active in his home state of Tamil Nadu, to reverse the policy to provide generation-based incentives. Good news: this has not happened. The earlier policy of capital-based incentives led to projects that installed windmills but did not often generate power.

..and low-interest money for renewable projects is good news
CSE had demanded that India should consider setting up a competitor to the US EXIM bank, which provides low-interest loans, but mandates imports of solar equipment. There is a glimmer of the idea in the FM’s Budget speech, where he says the government will provide low-interest bearing funds from the National Clean Energy Fund to lend for viable renewable energy projects.

Reworking the criteria for backward districts is much-needed, but does not go far enough
The FM has said that it would be more relevant to use per-capita income, literacy and other development indicators for future planning and devolution of funds in the Backward Regions Grant Fund. It is also important to revise the conditions for grant making so that districts that perform well are incentivised. Otherwise, being and staying ‘backward’ remains the incentive.

Payment to states for keeping forests missing once again; no incentive for green growth
At the moment the country has a provision to pay the “net present value” of forests while felling trees. In other words, we pay to cut. But there is no payment for standing forests. There is no payment for the ecosystem value of the standing resource. For the past many years, chief ministers have demanded that they be paid to protect forests. The 12th Finance Commission agreed that states must be paid for the maintenance of forests — some Rs 1,000 crore between 2005 and 2010. The amount was not substantial, but the principle was established. In 2010, the 13th Finance Commission reiterated the need to compensate states and enhanced the allocation to Rs 5,000 crore over the next five years. But still, the money has not been provided. This is the core of the problem and this needs to be addressed urgently. Budget 2013 is a missed opportunity to fix this and build a movement for green development in the country.

SUV excise duty from 27 to 30 per cent is much-needed step, but falls short on what it will achieve
The FM has rightly noted that SUVs occupy greater road and parking space and should bear a higher tax. What he has missed is that these vehicles are also inefficient users of diesel, which remains cheaper than petrol and highly polluting. While a higher excise duty is good, it is too small a step being taken by the government to deal with the diselisation of private vehicles in the country. The fact is that the government has raised diesel prices for bulk users by Rs 10 a litre, as compared to Rs 0.50 for retail users. In other words, public buses and railways, used by the very poor, are being targeted in this policy, while the cars of the relatively and very rich get off lightly. This is not a policy initiative against SUVs, only small talk and indifferent steps.

Funds for water purification plants a symptom of hardware mindset
The Budget is technology-focused but not problem-solving. The FM says arsenic and fluoride is a serious concern and goes on to allocate Rs 1,400 crore for water purification plants. There is enough experience to know that these plants do not work in rural India, where there are problems of maintenance and electricity; also, there is no capacity to pay for treated water in these places. Instead, what has worked is programmes for rebuilding and cleaning surface systems so that dependence on polluted groundwater goes down. The FM clearly does not understand water management, only the business of water.

Purchase of buses good news, but killed by diesel policy
Budget 2013 supports 10,000 new buses, especially for hill states. This is an important initiative. But the fact is that the government gives with one hand and grabs much more with the other. The current policy is to increase diesel prices for the bulk sector by Rs 10 per litre. This has virtually killed all public bus companies. Ironically, the price hike for retail – private cars – is only Rs 0.50 paise. Double-speak is the name of the game.

  • For more on the Budget 2013-14 -- updates, highlights, comments, analysis… -- just visit our Budget Special at http://www.downtoearth.org.in.
  • For any other assistance, please contact Souparno Banerjee at souparno@cseindia.org / 9910864339.