Budget 2023 | FM hikes allocation for renewable energy by 48% to Rs 10,222 crore

The Central government on Wednesday allocated Rs 10,222 crore to the Ministry of New and Renewable Energy as part of the Union Budget 2023.

In the last Budget, the Centre had allocated Rs 6,900 to the ministry, and in the one before that it allocated Rs 5,753 crore for the same.

Climate action and sustainability have been a key topic of discussion as well as implementation, especially in the last year, not just in the country but on various global platforms as well such as the G20, World Economic Forum, etc.

Closer home, in the past year, quite a few ministers across the government have spoken about going green in their respective portfolios – whether it is Petroleum Minister Hardeep Singh Puri talking about India’s plans to manufacture and export green hydrogen or the Civil Aviation Minister Jyotiraditya Scindia talking about the ministry’s plans to continue making airports green as well as exploring sustainable aviation fuel for aircraft.

Talking about the Green Hydrogen Mission during this year's Budget announcement, the Finance Minister said it would facilitate the transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports and make the country assume technology and market leadership in this sunrise sector. "Our target is to reach an annual production of 5 MMT by 2030," she said.

Apart from this, last month, the Union cabinet also approved an initial outlay of Rs 19,744 crore for the National Hydrogen Mission. Union minister Anurag Thakur had said that incentives worth over Rs 17,000 crore will be allotted for electrolyser and green hydrogen manufacturing in the country, while "Rs 400 crores will be spent on developing green hydrogen hubs in the country." -

This year’s Budget allocated Rs 5,331.5 crore for the solar power sector, including grid and off-grid projects. This was a 53.65 percent increase compared to the previous’s Budget’s Rs 3,365 crore and a 104.58 percent (increase/decrease) over FY21’s Rs 2,606 crore allocation.

Rs 1996.46 crore was allocated for solar energy under the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme, which was launched in 2019. One of the components of the scheme is to install 17.5 lakh standalone solar agriculture pumps in off-grid areas, while another component aims to solarise 10 lakh grid connected agriculture pumps.

A few months ago, Power and New & Renewable Energy Minister RK Singh said India would have over 65 percent of its power generation capacity from non-fossil fuels by 2030. He also stated that the country has already 170 GW of renewable energy (including large hydro), while another 80 GW is under construction. India has planned to have 500 GW of renewable energy by 2030.

Meanwhile, the National Institute of Solar Energy received Rs 54 crore in the Budget, which was Rs 9 crore from last year's Rs 45 crore.

The programme for wind and other renewable energy received Rs 1,245 crore compared to the previous year’s Rs 1,102 crore. Of which, hydro power off-grid and on-grid received Rs 31 crore.

While the Finance Minister emphasised a lot on the government's intent to enable India's transition to cleaner sources of energy, the Budget itself has not set any target for the amount of green bonds that will issued in the financial year starting April 2024.

Green bonds such financial instruments that generate proceeds for investment in environmentally-sustainable and climate-suitable projects.

Last week, the government sold its first sovereign green bonds worth Rs 8,000 crore at yields below comparable government bonds. The Reserve Bank of India auctioned Rs 4,000 crore of five-year bonds at a coupon rate of 7.1 percent and another Rs 4,000 crore of 10-year bonds at a 7.29 percent.

The yield on green bonds are five to six basis points below normal government securities. The proceeds will be utilised for funding public sector projects seeking to reduce carbon emissions. -

Another auction is scheduled to take place on February 9.