Mr Jaitley has fallen into the old trap of financing meaningless cleaning initiatives
Listening to Finance Minister Arun Jaitley, Union Budget 2014 seemed to be a little bit of everything and lots of nothing. It is also difficult to pass a verdict on a government that has had barely 45 days to make up its mind on how it will move the country forward. But let me try and tease out the big issues on offer.
The most important Budget announcement for sustainability is the enhanced clean energy cess on coal, increased from Rs 50 to Rs 100. But what is equally clear is that the finance minister has no clue what to do with this money. Currently, roughly Rs 3,000-3,500 crore is collected in the National Clean Energy Fund, but not much is spent. Nor is there a clear direction on how to ensure that this fund, collected by making dirty coal more expensive to use, is invested in renewable energy projects that meet the needs of the poorest. In fact, what the finance minister has done is to fall into the trap of his predecessors of expanding the scope of financing from the fund to meaningless schemes of cleaning initiatives and research in clean environment.
This is exactly what the former environment minister, Jairam Ramesh, had proposed when he argued that the clean energy fund should be used for the Green India Mission. We had opposed this then. Not because planting trees is not important. But because the government is already sitting on piles of money - collected as net present value and compensatory afforestation, which is not being used or used effectively. Also, we had argued that this clean energy fund must be used for the specific purpose of making India leapfrog in terms of access to clean energy for all.
This is then the second problem with the Budget 2014's idea of sustainability. It says a lot about solar and renewable energy, which is welcome. It will be important to study the fine print to understand what all the pronouncements on duty exemptions in this sector will add up to. But what it does not appreciate is the fact that the biggest future of solar energy in the country will be in decentralised and off-grid solutions - smaller power plants that provide clean energy to millions across India's grid and to remote villages that have electricity lines but no power. Instead, Budget 2014 falls back on the "big" solar plants - announcing Rs 500 crore for ultra mega solar power plants.
Thirdly, there is the Ganga. Clearly, this is a big commitment of the current government. The prime minister has already put Ganga cleaning high on the agenda. The finance minister has provided the funds - Rs 2,037 crore - which is the highest annual allocation for the river to date. But what is disappointing is that this allocation comes with no word about the re-direction needed to clean the river. Let us be clear, even the previous United Progressive Alliance (UPA) government had made funds available - even secured a loan of Rs 4,600 crore from the World Bank for Ganga cleaning. But all this money has not cleaned the Ganga because the approach is flawed. It focuses on building sewage treatment plants, which does not work in our poor and largely un-sewered cities. To be fair, we cannot expect the new finance minister to have all the answers. But we can expect that he would stress the need to reinvent the paradigm of pollution management. Otherwise, what this means is that there will be more money but no cleaning.
This lack of direction is also the case with the welcome thrust on total sanitation - indeed the government's intention to cover all households by 2019 with toilets is not to be scoffed at. It is important and urgent that we make clean water, toilets and disposal of waste a national mission. The prime minister had said that toilets were more important than temples. But what is disappointing is that, once again, the finance minister does not spell out how this would be done. Worse, he does not even provide a revised and enhanced allocation of funds for this programme.
The UPA-II government, to its credit, had progressively increased the funding for drinking water and sanitation - going from Rs 8,000 crore in 2008-09 to Rs 15,000 crore in the February 2014 interim Budget. But sanitation - the Nirmal Bharat Abhiyan - still gets Rs 4,000 crore annually. This is minuscule given the scale of the challenge.
So are we to assume that the National Democratic Alliance does not see the need for anything different in this budgetary allocation? And if so, then how does it aim to provide toilets to over 600 million people who still defecate in the open? How will it scale up this work, without additional money and effective delivery?
This approach follows on in the "Rs 100 crore" plans that are liberally scattered in the Budget 2014. For instance, Rs 100 crore is set aside for metro projects in Lucknow and Ahmedabad. But the fact is that metro systems cost anywhere between Rs 150 crore and Rs 300 crore a kilometre to build. So is this Rs 100 crore going to build one km or just go into feasibility studies?
Even more importantly, Ahmedabad, the prime minister's home turf, has done pioneering work in building a bus rapid transit system. It works, it is cheaper, much more affordable and sustainable. So why does Budget 2014 not have anything to say about buses? Is it because it is too low-tech and old-fashioned?
The recognition that climate change is real and the need to "adapt" is urgent is a very important message of Budget 2014. The finance minister provides Rs 100 crore for a national adaptation fund. While it can be argued that this is too little, it is also a fact that this is the first step in recognising the need to invest in building resilience of poor communities against climate change. The question now is, what will this money be used for?
But what I like best about Budget 2014 is that it puts tobacco and sugar into one category - excise duty on cigarettes, pan masala, gutkha and aerated drinks with sugar - have all been increased. It is clear that aerated drinks are the new tobacco. It would have helped if the excise duty hike were even higher. But still, this is something to cheer.
An overarching theme was missing from Mr Jaitley's Budget, but little details hint towards a larger strategy