Union Budget 2025: A Lukewarm Commitment To Climate Action

The budget by Finance Minister Nirmala Sitharam falls short on climate action, failing to bridge the gap between ambition and execution for a sustainable future.

The Union Budget 2025, positioned as a forward-looking fiscal blueprint, once again offers only a token acknowledgement of climate action. While the Ministry of Environment, Forest, and Climate Change (MoEFCC) received a modest 2.47% increase in its budget allocation, funding for critical sectors such as industrial decarbonization, climate adaptation, and ecosystem conservation remains inadequate. Although increased spending on solar energy and electric vehicles signals a push towards clean energy, the budget fails to take a holistic approach to India’s climate agenda.

India has set ambitious climate targets, aiming for net-zero emissions by 2070 and a 50% reduction in emissions intensity by 2030. Achieving these goals, while also striving for Viksit Bharat (Developed India), demands resilient and inclusive development strategies. If climate risks remain unmitigated, India faces the possibility of losing 24.7% of its GDP by 2070 due to rising climate-induced disruptions. With the United States pulling back from its Paris Agreement commitments, the world increasingly looks to India as a global climate leader. However, India's current fiscal stance on climate action falls short of expectations, underscoring the urgent need for policy interventions that can bridge the gap between ambition and action.

A man cooling himself with water in a hot sunny day (AP)

With minimal budgetary support for critical climate sectors, how can India meaningfully advance its climate action efforts? Looking ahead, what structural and strategic frameworks must be implemented to fulfil its climate pledges effectively?

First, India needs a meaningful shift in policymaking that requires redefining how growth is measured. One of the fundamental challenges India faces is the lack of integration between climate policies and economic strategies. The budget highlights an ongoing struggle between economic growth—driven by infrastructure expansion and industrial investments—and environmental sustainability. The government's announcements on climate action remain separate from those on economic development, perpetuating a false dichotomy between the two. A shift in perspective is necessary: climate action should not be viewed as an economic constraint but as a growth multiplier that can drive sustainable and equitable progress.

India must move beyond the conventional reliance on GDP as the primary indicator of economic progress. A more comprehensive framework that incorporates sustainability metrics—such as carbon intensity, resource efficiency, and climate resilience—would provide a clearer picture of long-term development. India must embed sustainability into its economic planning to ensure that growth does not come at the cost of environmental and social degradation.

Farmers busy planting samples in their fields (ANI)

Second, the budget’s focus on infrastructure development further highlights this disjointed approach. With ₹11.5 lakh crore allocated for capital expenditure, the government has reaffirmed its commitment to modernizing India’s infrastructure. However, this spending lacks a climate-resilient blueprint. Infrastructure projects initiated today will shape India’s development trajectory for decades to come, with many expected to last beyond 2050—a time when climate risks are projected to intensify. Without integrating climate resilience into infrastructure planning, these projects could entrench vulnerabilities rather than mitigate them.

India’s infrastructure expansion must account for the environmental and socio-economic risks posed by climate change. Large-scale projects often lead to displacement, loss of land, and livelihood challenges, particularly affecting marginalized communities. Yet, the budget does not outline strategies to mitigate these impacts. The absence of climate risk assessments in public investment planning remains a glaring oversight. As India builds its future cities, highways, and energy grids, mainstreaming sustainability into these projects is imperative. Policy frameworks must ensure that infrastructure is not only economically viable but also environmentally sound and socially inclusive.

Image of melting snow from Ladakh, which is challenge due to climate change (ETV Bharat)

Third, a critical gap in the budget is its overwhelming focus on mitigation at the expense of adaptation. While investments in the solar sector and electric vehicles align with India's low-carbon transition goals, adaptation measures receive minimal attention. Funding for biodiversity conservation has stagnated, and allocations for coastal resilience—a crucial area given India’s vulnerability to rising sea levels—have declined. The National Adaptation Fund for Climate Change (NAFCC), designed to support adaptation efforts, remains underfunded, limiting its capacity to protect vulnerable communities.

India, as one of the most climate-vulnerable nations, faces severe threats to its agriculture, water security, and urban resilience. Rising temperatures and extreme weather events are already leading to declining crop yields, threatening food security, and exacerbating water shortages. The brunt of these climate impacts is disproportionately borne by socio-economically disadvantaged groups, including small farmers, migrant workers, and people living in ecologically fragile regions. A more balanced approach—one that places equal emphasis on mitigation and adaptation—is necessary to safeguard livelihoods and ensure long-term resilience.

Fourth, a major weakness in the current climate finance framework is its over-reliance on volatile private investments. The budget does little to address this challenge. To mobilize climate finance at scale, India must implement a robust regulatory framework that attracts both public and private capital into climate-focused projects. Establishing a sustainable finance taxonomy, coupled with stricter disclosure norms, would provide much-needed clarity for investors while ensuring that capital flows toward projects with tangible environmental benefits.

Moreover, a transparent monitoring and evaluation mechanism is crucial to measure the effectiveness of climate investments. Current climate finance tracking systems lack comprehensive data on the socio-economic and ecological outcomes of funded projects. A well-defined impact assessment framework would not only improve accountability but also help in refining policies to ensure that climate finance translates into measurable progress.

India’s climate commitments require more than symbolic budgetary allocations. Achieving climate resilience and sustainable growth demands structural policy shifts, integration of climate action into development planning, and a well-calibrated balance between mitigation, adaptation, and finance. Without these measures, bridging the gap between ambition and execution will remain an uphill battle.

(The author Is a Fellow and Lead Climate Change and Energy at the Observer Research Foundation)

(Disclaimer: The opinions expressed in this article are those of the writer. The facts and opinions expressed here do not reflect the views of ETV Bharat)

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