Decoding the Union Budget 2025: A Green Lens on Energy, Resilience and Sustainable Development
New Delhi, February 01, 2025: Union Finance Minister Ms Nirmala Sitharaman presented her eight consecutive budget on Saturday. The budget has made significant allocations to Clean Tech Manufacturing and Water Resources. The Energy and Resources Institute (TERI) and its panel of experts is a leading voice in sustainable development, energy, and environmental research, dissects and decodes the budget’s potential to shape India’s path toward a greener, more resilient and sustainable future.
Sharing her thoughts on the Union Budget 2025, Dr Vibha Dhawan, Director General, TERI, said, A “holistic here and now budget” geared to position India as a robust, inclusive, and resilient economy with a focus on research and education, health and infrastructure, industrial competitiveness and clean energy.
According to Ambassador Ajai Malhotra, Distinguished Fellow, Climate Change, TERI, the budget demonstrated fiscal prudence. “This is a sensible, fiscally prudent Budget that benefits the salaried middle class and will boost domestic consumption and attract investments. The envisaged partnerships with private industry in the nuclear sector, as regards Bharat Small Reactors, and allocation for R&D of small modular reactors are welcome developments. The outlay for Artificial Intelligence is also a noteworthy start, as AI innovation can positively impact numerous industries.”
Welcoming the government’s allocation of funds to the water sector, Dr SK Sarkar, Distinguished Fellow, Water Resources, TERI, said, “The Government has extended the one hundred per cent water access to rural households completion date by 2028 with enhanced outlay. In 2019, the Government announced the completion of safe and universal rural water access by 2024. As of now there are about 19 crore rural households and about 80 per cent households were given pipe water connection for 55 lpcd. To complete the whole process, the Government has extended the ‘Har Ghar Jal’ program of JJM to 2028. The budget proposal for water sector is very much welcome and this will help India achieve UN Sustainable Development Goal 6.1 regarding safe and universal water access, well before 2030.” He added, “While funding for afforestation, ecosystem restoration, and tiger conservation has been enhanced, that for biodiversity initiatives appears to be insufficient given India’s recently updated National Biodiversity Strategy and Action Plan.”
Developing 100 GW of nuclear capacity by 2047 with increased participation from the private sector is a welcome step. Nuclear energy provides round-the-clock clean energy, obviates the need for creation of additional energy storage capacity required with variable renewable energy sources and provides stability to the grid. The proposal for development of five small modular reactors indigenously in the medium term can open opportunities for supply of non-fossil energy in hard to abate sectors,” shared Mr AK Saxena, Senior Director, Electricity and Renewables, TERI. He further added, “A boost to clean-tech manufacturing in solar cells, grid-scale batteries, etc., will help enhance energy security. The expansion of this initiative to the full solar power value chain, starting with upstream components like polysilicon, ingots, and wafers, is eagerly anticipated. Centre of Excellence in AI will facilitate building intelligent Decision Support Systems”.
Ms Suruchi Bhadwal, Director, Earth Science and Climate Change, TERI, said, “The budget focuses on inclusivity of people, boosting the industry through green manufacturing and a large focus on nuclear. This includes the MSME support, support for private sector R&D (Research and Development), food security and nutrition.”
Dr Suneel Pandey, Director, Circular Economy and Waste Management, TERI, observed that, “The government wants to make India a hub for clean technology manufacturing. A special fund has been created to help cities improve their essential urban needs and the government will cover 25 per cent of the cost of these projects. To encourage a ‘circular economy’, the government is giving credit notes to those involved in ship breaking. This makes it more financially attractive to dismantle old ships and reuse the materials. The measures around ship breaking aim to make India’s ship breaking industry more competitive globally. Certain important raw materials (CRMs) and waste products needed for recycling can now be imported without import taxes. This will help boost recycling efforts within the country and reduce our reliance on new resources.”
Dr Ritu Mathur, Director, Integrated Assessments & Modelling, TERI, found that the Union Budget focussed on making the agricultural sector more resilient. “The budget has a focus on human capital and seeks to put more money in the hands of people, while pushing several things to support Governments asset monetization plan with a big investment push across several sectors. The focus on making the agriculture sector more resilient, stress on R&D, improving connectivity, focusing on livelihoods, and positioning MSMEs as the engine of growth are in keeping with the goals of ‘Make in India’ and ‘Viksit Bharat’. Simultaneously, it also looks at sustainability in the energy sector by bringing in a target of 100 GW of nuclear capacity by 2047, pushing circularity in ship building industry, focusing on enhancing public transport, etc.”
Mr Anshuman, Director, Water Resources, TERI, underscored the importance of the continued commitment towards the JJM. “The Union Budget 2025 announced Government’s continued commitment for 100 per cent coverage of population under the Jal Jeevan Mission (JJM) with timeline extended till 2028 with enhanced outlay. While the promising commitment of quality and O&M of created infrastructure is a much desired and welcome step, it is effective and timely implementation would hold the key towards sustainability of JJM interventions. The Union Budget gives much desired boost to investment in drinking water provision, however, an increased impetus with enhanced investment is desired in other critical areas specifically the pollution abatement and wastewater management, which continues to be a major challenge.”
Sharing her thoughts on the ‘green budgeting’ aspect of the Union Budget, Dr Shailly Kedia, Associate Director, Sustainable Development and Outreach, TERI, said, “As India pursues economic growth, its budget sends a troubling message: environmental funding remains inadequate. The Ministry of Environment, Forest and Climate Change saw only a 2.5 per cent increase (INR 3,412.82 crores) while the overall budget grew over 7 per cent. Key sustainability indicators—waste management, coastal resilience, biodiversity—are missing from the Output Outcome Framework 2025-26. Meanwhile, the government’s integrated farming target is a mere 30,000 farmers in a country of millions of farmers. India’s economic growth cannot come at the cost of environmental collapse. Green budgeting can serve as a self-assessment tool, ensuring that sustainability is embedded in fiscal planning—and is not an afterthought.”
Mr Sharif Qamar, Associate Director, Transport and Urban Governance, TERI, was supportive of the moves to support EV battery manufacturing. He shared, “Finance Minister Nirmala Sitharaman said that the cobalt powder and waste, lead, zinc, scrap of lithium-ion battery, and 12 more critical minerals will be exempted from Basic Customs Duty (BCD). She also announced that 35 additional goods for EV battery manufacturing, and 28 additional goods for mobile phone battery manufacturing to be added to list of exempted capital goods”.
The government’s push for decarbonization by 2070, through the new critical mineral recovery policy, was welcomed by Mr Souvik Bhattacharjya, Associate Director, Resource Efficiency & Governance, TERI, said, “As India moves to decarbonize by 2070, while meeting its interim NDC target, announcement of a policy for recovery of critical minerals from tailings to support augmenting resources in critical technologies is a welcome move. Exemption of cobalt powder and related wastes, including scrap of lithium-ion battery, and twelve more critical minerals will help to scale up recycling capacities in the country supporting mineral security. This would contribute to achieving the goals of the National Critical Mineral Mission, as approved by the Cabinet.”
Highlighting the potential of the ‘Manufacturing Mission’ and its potential benefits to a wide range of industries, Mr Alekhya Datta, Associate Director, Electricity and Renewables, TERI, said, “This mission shall enable India to create a framework for ‘India plus many’ whereas ‘China plus’ strategy is predominant at present. It will further boost the QUAD economies to strengthen clean energy supply chains in the areas of solar energy, batteries, green hydrogen and in nuclear power generation. India should leapfrog towards indigenous development of large machines and create domestic lines utilising existing PLI scheme and with new impetus under the proposed mission in current Union budget.”
Dr Nupur Bahadur, Associate Director, Waste Management, TERI, found the budget to be ‘encouraging’. “A transformative budget, aimed at achieving Viksit Bharat, emphasizes the water and sanitation sector through a Rupee 1 lakh crore urban challenge fund. Besides, the Jal Jeevan Mission (JJM) mission has been extended till 2028, with a projected objective to ensure 100 per cent coverage for drinking water facility to all households. The provisional arrangement for municipal services and encouragement for States envisaged under the citizen centric urban deliveries will help the States to implement action plans in PPP mode. Further, the budget has prioritised National Centre of Excellence for capacity building, skill development and training of trainers. The provision for R&D outlined in this budget is the stepping stone for Atmanirbhar Bharat. This is bound to accelerate innovation addressing efficiency and feasibility.
Voicing her thoughts, Dr Pushplata Singh, Associate Director, Sustainable Agriculture, TERI, shared, “The Union Budget 2025, has positioned the agriculture sector as the primary driver for a ‘Viksit Bharat, fostering inclusive, accelerated and sustainable growth, with a special focus on vulnerable groups like marginal farmers, women, and marginalized communities. Expert calculation based special schemes have been introduced for transforming underdeveloped districts, boost pulse production, and enhance farmer’s capability through Kisan Credit Card loan limits. Establishment of a Makhana Board in Bihar, improved urea supply in Assam are some key steps to empower poor farmers of Bihar and North-Eastern states.”