Greenbudgeting: essential for sustainable economic growth

Even though Asia has been afflicted with a serious economic crisis during the end of the 1990s, India has done reasonably well in maintaining a healthy rate of growth. The current phase of economic reforms being implemented by the Government of India has raised expectations that economic growth will be accelerated even further, and investments for key sectors of the economy enhanced in the coming years. The Budget of the Government of India due to be presented by the Finance Minister, Mr Yashwant Sinha on 29 February is, therefore, being awaited with great expectations and hopes that it would spur a higher rate of growth of the Indian economy. There are undoubtedly concerns about the budget deficit, which has been threatening to go out of hand, particularly if we look at the combined deficits of the states and the union government. The situation looks daunting, but can be brought under control with effective fiscal discipline. However, in another area there has been very little focused attention provided by the public at large in the context of the forthcoming Annual Budget. This is the area of greening the Indian economy and ensuring that the fiscal measures and instruments included in the budget actually promote a movement towards sustainable development and protection of the environment, consistent with the objectives of economic development. TERI organized a conference on the subject on 13 January, the output of which has been processed and converted into a brief proposal for the Finance Minister to consider while formulating the Budget. The document is comprehensive and covers the major sectors of the economy including agriculture, industry, and transport. It makes out a case for three types of initiatives being included in the Budget. The first would involve taxing at appropriate levels those activities which lead to pollution, such as manufacture of inefficient automobiles. The second relates to providing incentives for those activities and initiatives that lead to efficient use of natural resources and reduction of pollution. The third set of measures would basically target budgetary allocations for activities such as forestry, where greater government allocations are required to step up activity levels in pursuit of restoring a healthy natural resource base. As economic growth accelerates, the need for streamlining environmental decisions would assume greater importance, and the Annual Budget would be an important means for ensuring proper attention to sustainable economic growth. It is hoped that the Finance Minister would consider TERI?s recommendations within this context.