Focus on energy, water, forests

Three new grants of Rs 5,000 crore each allocated.

The Thirteenth Finance Commission has allocated Rs 15,000 crore — through three new grants of Rs 5,000 crore each — to support environmental protection and sustainable development programmes in sectors such as renewable energy, water management and increasing forest cover across the country.

The commission also called for a shift in the current fertiliser subsidy regime to support a more eco-friendly system of nutrient-based fertiliser subsidy to enhance the soil quality. Highlighting the ecological cost of mining, the commission has asked the state governments to share a portion of their income from royalties with those local bodies from whose jurisdiction such income originates.

While 25 per cent of the forest grant is meant to compensate the state for the loss of economical development opportunities by deciding to keep areas under forest cover, the balance will be used by states for development purposes that help preservation of forest wealth.

The grants for the first two years are unconditional and meant to allow states to develop working plans for all forest divisions, though the allotment for the remaining three years are linked to the approved plans.

The second grant is meant to incentivise states that move towards generation of grid electricity from renewable sources during April 2010 to March 2014. The third grant is in the area of water management where the commission wants states to set up an independent regulatory mechanism for the water sector and an improved maintenance of irrigation networks.