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Environmental Aspect of The Union Budget 2021

Updated: Apr 6, 2021

On the 1st of February, Finance Minister Nirmala Sitharaman stood in front of the Indian Parliament to present what could be the most consequential Union budget of this century. With thousands dead and the economy in ruins, the pandemic had brought the Indian Republic to its knees. Sectors like healthcare took the main stage and received huge boosts in the budget. But while the government focused on dealing with the pandemic, it ignored a much bigger problem, that of the environment.

The official death count from the pandemic in India stands at 155 thousand. However, this number pales in comparison to the number of deaths caused by India’s environmental pollution. In 2019, 1.7 million deaths were attributed to air pollution in India, which is equivalent to a 36 billion USD loss in economic output.

This article analyzes the environmental aspect of the 2021 Union Budget by providing an overview of its strengths as well as its shortcomings. But before delving into the budget itself, it is important to examine the context behind the current state of the environment in India. What is India’s National environment policy? What are the laws that protect the environment and enforce sustainable development?


The roots of environmental conservation in India can be traced all the way back to the beginnings of Indian civilization. The Arthashashtra by Kautilya written in 300 BC had provisions to regulate aspects related to the environment. Modern environment conservation started in the 1970s in India which coincided with the 1972 UN conference on Human Environment in Stockholm. Then Prime Minister Indira Gandhi declared in front of the UN that the environment cannot be developed in poverty as it is one of the major reasons for environmental degradation. According to her, the new paradigm for development was growth with equity, stability and sustainability. The UN conference was followed by a spur of environmental legislation that aimed to restore ecological balance, such as The Wildlife (Protection) Act of 1972 and The Forest (Conservation) Act of 1980.

However, before 1976, there was no mention of environmental protection in the constitution. In 1976, the 42nd amendment came into existence. Article 48A was added to the Directive Principles of State Policy, which stated that “The state shall endeavour to protect and improve the natural environment and safeguard the forests and wildlife in the country”. With this, ‘Forests’ and ‘Wildlife’ were also dropped from the State list in order to incorporate them in the Concurrent (Centre) list.

Despite these developments, India did not have a general national environment policy until the need for one was highlighted in the aftermath of the Bhopal Gas Tragedy. In 1984, a gas leak in Bhopal caused approximately 15,000 people to choke to death. The deep impact that this disaster had on the minds of policymakers led to several landmark decisions. Two of the most significant ones were the establishment of the Ministry of Environment, Forest and Climate Change in 1985 and the Environment (Protection) Act, 1986.

The purpose of the EPA was to implement the decisions of the United Nations Conference on the Human Environment (1972) that focused on the conservation of the human environment and the prevention of hazards to human beings, other living creatures, plants and property. The Act was an “umbrella” legislation designed to provide a framework for central government activities and future legislations.

This led to the drafting of the National Environment Policy (NEP) two decades later, which recognised the need to ensure that communities that depend on vital resources must benefit more from their conservation than their degradation. The NEP makes Environmental Impact Assessment mandatory for projects, and requires details of the public hearing and a project report to be sent to the impact assessment agency for clearance, and mandates further review by a committee of experts in certain cases.


The Environment policy of the current government came under fire after the notification of EIA 2020 (Draft). The draft proposed the removal of several activities such as the construction of flyovers and oil and gas exploration from the purview of public consultation It also exempted projects like solar thermal power plants from gaining prior environment clearance. The new draft allowed for post-facto approval for projects, which meant that the clearances for projects can be awarded even if they have started construction without securing them. As a result, any environmental damage caused by the project could be waived off as the violations get legitimised. Finally, The EIA Notification 2020 excluded public reporting of violations and non-compliance. Instead, the government would take cognisance of only those reports that were filed by the violator-promoter, a government authority, Appraisal Committee or Regulatory Authority. While this draft was great news for industrialists and businesses, it was a big hit to the decades of environmental conservation efforts in India.

Budget 2021

The 2021 budget was a mixed bag, especially in the case of the environment. While the government cut funding for numerous organisations, it also introduced some key policy changes.

The Positives:

  • Implementation of Voluntary Vehicle Scrapping: Under the voluntary vehicle scrapping policy, personal vehicles would undergo a fitness test after 20 years while commercial vehicles would require it after completion of 15 years. These vehicle owners would also have to pay a green tax. Union Minister Gadkari claimed that 1 crore vehicles would undergo scrapping as a result of this policy which would encourage new car sales and boost the economy as well.

  • Introduction of norms for waste management to reduce plastic waste.

  • Investment in Green Energy: Capital infusion of Rs 1,000 crore to Solar Energy Corporation of India and Rs 1,500 crore to Indian Renewable Energy Development Agency.

  • Extension of the city gas (CNG) distribution project to 100 more districts.

  • National Coastal Mission allocation was nearly doubled with the government allotting it Rs 200 crore from Rs 103 crore allotted to it last year. Under the Mission, the environment ministry is responsible for securing the livelihoods of coastal communities, protecting the coastal stretches and promoting sustainable development based on scientific principles.

  • Increasing public transport: The budget has allocated a sum of Rs.18,000 crore to finance, build and operate 20,000 new public buses.

  • Promoting LPG: Increased Ujjwala coverage to an additional one crore households which will encourage more people to switch from unsustainable fuel sources such as firewood.

  • Launch of National Hydrogen Mission: Hydrogen energy involves the use of hydrogen and/or hydrogen-containing compounds to generate energy to be supplied for household and commercial use. It has been recognized as highly energy-efficient, having tremendous ecological and economic benefits.

The Negatives:

  • Reduction in Environment Ministry Budget: Overall, the ministry’s budget was cut by Rs. 230 crores. This would lead to a drastic slow down in environmental conservation activities.

  • Lack of information on how the Rs. 2217 crores set aside for air pollution is going to be utilized. Moreover, there is no public data on how the Rs. 4400 crores that were set aside for the same purpose in 2020 was utilized.

  • Climate change action plan budget reduced by Rs. 10 crores.

  • Disengaging with the Wildlife Institute of India, which depends on the government for a grant-in-aid of Rs. 34 crores.

  • Reducing allocation for Project Tiger by Rs. 50 crores. Over the span of two years, the government has now reduced allocation by Rs. 100 crores.

  • Reducing allocation for Project Elephant by Rs. 2 crores.

  • Green India and Afforestation allocation also reduced by Rs. 20 and 10 crores each.

  • National Clean Air Program: Rs. 470 crores have been allocated to NCAP to check air pollution in cities. But according to the Environment Ministry itself, it needed at least Rs 660 crores. Considering the fact that installing just one air-quality monitor costs Rs 1.2 crore, this lack of funding is a major blow to the effectiveness of the program. Even in the first year of NCAP (2019-20), the government distributed Rs 300 crore among 102 cities, with the largest cities receiving Rs 10 crore each – and those like Guwahati getting only Rs 20 lakh.

While the government has introduced some landmark policy decisions in the budget concerning the environment, the immense cost cuts to some of the nations most vital conservation programs suggest that India is treating environmental conservation as a luxury during the pandemic. It is no secret that environmental pollution has huge economic and human costs. If the Indian economy is to bounce back from this pandemic it must do so in a sustainable manner. As Indira Gandhi rightly remarked in 1972, equity, sustainability and stability should be the new paradigm of development.

(Written by Aviral Anand and Edited by Sagara Ann Johny.)


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