It is time to rebuild the economy besides focusing on the environment which has been relegated to the background since March 2020
The fall in India’s daily COVID-19 caseload has been reinforced by the launch of the vaccination drive. Assuming that the core phase of India’s fight against the virus is over, it is time to rebuild the economy besides focusing on burning issues such as the environment which have been relegated to the background since March 2020. The Union Budget 2021-22 is an opportunity for the Centre to right this wrong.
The Budget that will be presented on February 1 by Finance Minister Nirmala Sitharaman is expected to focus on the manufacturing sector, AtmaNirbhar Bharat and the healthcare sector to fire up the economy. According to those in the know, the Budget is likely to give environmental issues and conservation a slip.
Apparently there is no exclusive focus on the environmental woes of the nation or measures to resuscitate the failing ecology and address climate change. The pandemic has taught us that a resilient environment, coupled with an ecologically sensitive humanity, could have watered down the impact of the virus. But if the environment is again relegated to the sidelines by this year’s Budget, we would not have learnt our lessons yet.
In order to ensure a balanced Budget that not only gives impetus to the economy but also puts a priority on environmental conservation, core urban issues pertaining to pollution need to be addressed first. Ever since the National Green Tribunal put a ban on petrol and diesel vehicles that are older than 15 and 10 years respectively, there is an express need to accelerate the Faster Adoption and Manufacturing of Hybrid and Electric (FAME) Vehicles initiative of the Government. As a part of the same, it is also essential to focus on the rapid setting up of the planned 2,636 charging stations across 62 cities. This will ensure the setting up of the EV ecosystem in India and will also reduce the massive energy import bill as a growing green vehicle industry will reduce dependence on fossil fuels.
In order to boost the EV industry which is at a nascent stage, start-ups involved in this sector need to be encouraged further. In this regard, the Budget needs to examine the tax structure and reduce the Goods and Services Tax (GST) on raw material which is anywhere between 18 per cent to 28 per cent. This high tax rate is acting as a deterrent for growth and creating working capital problems for EV manufacturers and start-ups. Bringing down the GST rates on raw material will allow business sustainability and encourage viability. Using the Budget as a platform, the Government must provide incentives to spur the growth in demand for EVs in the commercial and passenger segments. These incentives can take the shape of compelling retail finance schemes besides lucrative exchange schemes for old vehicles.
The Budget must also provide the long overdue push to the green energy sector. Under the present economic conditions, the renewable energy sector, which was already on the back foot, has suffered further setbacks. The sector needs a renewed policy that encompasses both tariff and non-tariff barriers, long-term financial support and direct incentives so that the domestic renewables industry is viable, competitive and cost-effective. The Government can consider a five per cent interest subvention on long term loans and working capital, upfront Central Financial Assistance of 30 per cent of the CAPEX and increase export incentive to eight per cent under the Remission of Duties or Taxes on Export Product. It is time to put the environment front and centre.
