Interim Budget 2024: What's New?

Introduction

On February 1, 2024, the finance minister presented the Interim Budget. The annual budget will be presented following the Lok Sabha election. The Interim Budget:

• Emphasises the importance of inclusive growth and prosperity with the vision of 'Viksit Bharat by 2047'.
• Recognises the significance of the transition towards a sustainable and green future in light of India's commitment to 'net-zero' emissions by 2070.
• Sets out the implementation status of the existing Government policies.

This Article examines the Interim Budget for India's Energy, Infrastructure and Technology landscape.

Energy And Environment

2024 – Announcements

• The focus shall be on ensuring energy security and growth through efficient use of resources while making them available, accessible, and affordable.
• To meet net-zero targets by the year 2070, the following measures have been proposed
  • Setting up coal gasification and liquefaction capacities of 100 MT by 2030.
  • Phased mandatory blending of compressed biogas in Compressed Natural Gas (CNG) for transport and Piped Natural Gas (PNG) for domestic purposes.
  • Financial assistance for procurement of biomass aggregation machinery to support collection.
• The electric vehicle ecosystem will be strengthened by extending support for charging and manufacturing infrastructure while promoting the adoption of e-buses.
• One crore households will be able to obtain up to 300 accessible units of free electricity per month through the solarisation of rooftops.
• To harness the offshore wind energy potential, viability gap funding shall be provided for an initial capacity of 1 gigawatt.
• To promote green growth, a new scheme relating to bio-foundry and bio-manufacturing will be launched to provide environmentally friendly alternatives like bio-agri inputs.

2023 – Implementation Status

• Green Hydrogen Mission – The Ministry of New and Renewable Energy launched the National Green Hydrogen Mission with an INR 19,700 crore budget to reduce fossil fuel dependency. The goal is 5 MMT of annual production by 2030. The Strategic Interventions for Green Hydrogen Transition Program was launched on June 28, 2023, with Green Hydrogen Standard at 2 kg CO2 eq./kg H2. Guidelines for R&D, testing, skilling schemes, and Pilot Projects are yet to be finalised.
• Energy Transition – In 2023, the Ministry of Petroleum and Natural Gas allocated INR 35,000 crore for energy transition and net zero objectives, with ₹30,000 crore designated for capital support to oil marketing companies for green energy initiatives.
• Energy Storage – In 2023, the Ministry of Power introduced measures to support Battery Energy Storage Systems (BESS) with a capacity of 4,000 MWH through Viability Gap Funding, and guidelines were issued for a detailed framework for promoting pumped storage projects nationwide.
• Renewable Energy Evacuation – Inter-state transmission system project aimed at evacuating and integrating 13 GW of renewable energy from Ladakh. The Power Grid Corporation of India is tasked with implementing the project and conducting a front-end engineering and design study.
• Green Credit Programme – The Ministry of Environment, Forest and Climate Change launched the Green Credit Programme under the Environment Protection Act, 1986 to promote positive environmental actions. The Green Credit Rules, 2023, were notified, covering sectors like tree plantation, water management, and sustainable agriculture, among other things.
• The Mangrove Initiative for Shoreline Habitats & Tangible Incomes was introduced to plant mangroves along coastlines and saltpan lands to promote environmental sustainability, prevent natural disasters, and support local livelihoods.
• The Amrit Dharohar Implementation strategy was introduced to optimise wetland usage and focussed on ecotourism, biodiversity, carbon storage and revenue generation for local communities.
• Statements of Fiscal Policy as required under the Fiscal Responsibility and Budget Management Act, 2003 ('FRBM Statement')-
  • The aim has been to parallelly ease fuel prices on a year-on-year basis by reducing the imports of crude oil and petroleum products from 28.9 per cent in April-December 2022 to 25.5 per cent in April-December 2023.
  • Sovereign Green Bonds worth INR 16,000 crores were issued for the Financial Year 2022-23 to increase this amount to INR 20,000 crore as per the budget estimates for 2023-24.

Infrastructure

2024 – Announcements

• Three major railway corridor programmes have been announced-
  • Energy, mineral, and cement corridor
  • Port connectivity corridor
  • High-traffic density corridor
• To accelerate the growth in the agriculture sector, private and public investment in post-harvest activities is to be promoted, including facilities for aggregating and storing, emphasising the processing and supply chains.
• The Pradhan Mantri Formalization of Micro Food Processing Enterprises Scheme shall be expanded further by allocating INR 880 crore.
• Capital Expenditure allocation for the Bharat Net Project aimed at connecting all Gram Panchayats by creating telecom infrastructure to be increased from INR 5,000 crore to INR 8,500 crore.
• With a vision of boosting air connectivity in Tier-II and Tier-III cities, the Government aims to continue expanding the current 149 airports.
• With a focus on transit-oriented development, large cities shall be supported by further expanding Metro Rail and NaMo Bharat.
• The focus will be on improving port connectivity on islands.

2023 – Implementation Status

• Sustainable Cities of Tomorrow – In 2023, states were encouraged to implement efficient urban planning reforms. The Department of Expenditure issued supplementary guidelines for the Capital Investment Scheme 2023–24 (Urban Planning Reforms).
• Digital Public Infrastructure for Agriculture – The architecture for three core registries has been finalised, including a Farmers' Registry application launched on a pilot basis. Geo-referencing is now completed for 75% of villages, and a pilot Digital Crop Survey has been initiated in 12 states.
• In 2023, the Department of Agriculture and Farmers Welfare announced the establishment of an Agriculture Accelerator Fund to support Agri-start-ups led by young entrepreneurs in rural areas by developing institutional mechanisms and operational guidelines for the fund.
• The Infrastructure Finance Secretariat was established by the Department of Economic Affairs to actively promote initiatives to attract long-term capital from domestic and foreign sources, fostering Public-Private Partnerships, and encourage diverse financial instruments such as Credit Enhancement, new credit rating systems, Infrastructure Debt Funds (IDFs), and Real Estate Investment Trusts (REITs)/Infrastructure Investment Trusts (InvITs) in sectors like railways, roads, urban infrastructure, and power.
• The Department of Financial Services initiated the Urban Infrastructure Development Fund (managed by the National Housing Bank) to address lending shortfalls for urban projects in Tier 2 and Tier 3 cities.
• FRBM Statement-
  • The PM GatiShakti National Master Plan is a digital platform that brings together 16 Ministries (including Roadways and Railways) to integrate planning and implement infrastructure connectivity in a coordinated manner and, consequently, optimise costs.
  • For the upcoming financial year, the key strategic objectives are-
    • Allocation and channelisation of resources towards capital spending for sustaining the momentum of infrastructure development.
    • Strengthening fiscal federalism by enhancing public infrastructure by supporting state efforts in capital spending.
    • Embracing the principles of PM GatiShakti by focussing on integrated and coordinated planning in infrastructure projects.
    • Prioritise the flow of expenditure towards crucial development sectors, such as health, education, housing, sanitation, green energy, agriculture, etc., for the welfare of citizens.

Technology

2024 – Announcements

• For all agro-climactic regions, expansion of Nano DAP liquid fertilisers shall be undertaken.
• A strategy for achieving self-sufficiency in oil seeds is to be formulated, which includes adopting modern farming techniques, crop insurance, and research on HYV seeds.
• Technology upgradation and restructuring of BSNL shall occur by increasing the capital infusion by 28%.
• To promote self-reliance in the defence sector, a new scheme shall strengthen deep-tech technologies for defence purposes.
• A corpus for INR one lakh crore is to be announced to promote research and innovation in the private sector by providing long-duration loans and low (or nil) interest.
• The funds allocated towards the Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India shall be increased to INR 6,903 crore.
• The funds allocated towards the Production Linked Incentive scheme for large-scale electronics manufacturing and IT hardware shall be increased to INR 6,200 crore.
• Under the Income Tax Act, to make certain proceedings electronic, the Central Board for Direct Taxation had to issue directions before March 31, 2024, regarding arm's length price, dispute resolution, and procedures and appeals before the Appellate Tribunal. The date for issuing directions in this regard has been extended from 31 March 2024 to 31 March 2025.

2023 – Implementation

In 2023, the Department of Higher Education announced the establishment of three Centres of Excellence in Health, Agriculture, and Sustainable Cities for advancing Artificial Intelligence in India. Funds were also allocated towards the Central Project Management Unit, Phase-I proposals, and evaluations.

• In 2023, the Ministry of Electronics and Information Technology announced the formulation of a National Data Governance Policy to facilitate innovation and research by start-ups and academia, with the National Data Governance Policy currently under finalisation.
• There has been an expansion in the types of documents available in DigiLocker, such as the Employees Provident Fund Organisation (EPFO) passbook and MNREGA card, contributing to the financial empowerment of all sections of society. Ongoing efforts within DigiLocker continue to focus on enabling the Fintech ecosystem.
• The Department of Pharmaceuticals introduced the Promotion of Research and Innovation in Pharma-Med Tech, aimed at promoting pharmaceutical research and innovation through centres of excellence.
• Extension of time-limit from 31 March 2024 to 31 March 2025 for incorporation of eligible start-ups for claiming profit-linked tax deduction under Section 80-IAC reflecting the aim to incentivise start-ups through increased cash flows and ease of doing business to enable their development and growth.
• FRBM Statement – SNA SPARSH – An initiative to achieve a 'just-in-time' flow of funds between state and centre consolidate funds with the help of an integrated network of State IFMIS, e-kuber of RBI, ensuring effective cash management. A pilot rollout in a phased manner by onboarding five states (Rajasthan, Odisha, Karnataka, Telangana and Jharkhand) has been notified along with two schemes.

Viewpoint

The Government aims to foster growth through a consensus-based approach. This growth is intended to be achieved through policy changes that are inclusive and sustainable. Programmes and schemes are expected to raise awareness and involvement at the community level, which is an essential building block for 'Viksit Bharat by 2047'.

The Budget focuses on a sustainable and green future in light of India's commitment to 'net-zero' emissions by 2070. India is a coal-based economy, as it does not generate sufficient energy through oil and gas, which are sources that provide greater flexibility to deal with the intermittencies associated with renewable energy. Therefore, India shall continue to rely upon coal gasification and liquefaction as potential solutions towards achieving net-zero emissions. The transition to a sustainable and green future shall be within the context of the national circumstances without compromising the growth and energy requirements. The foregoing reflects India's plans to set up coal gasification and liquefaction capacities of 100 MT by 2030.

India's policies towards realising 'Viksit Bharat by 2047' may be evaluated against the implementation of transformative actions such as enhanced finance (Infrastructure Finance Secretariat), diffusion of low-carbon industrial decarbonisation (Energy Transition) and community-level partnerships (Amrit Dharohar Implementation Strategy).

The Budget reflects India's commitment to tackling climate change and supporting sustainable development. The relationship between technology, infrastructure and energy is multidimensional and a balanced and sustainable approach is required for a green and sustainable future. The promotion of electric vehicle infrastructure in this Budget exemplifies the nexus of energy with technology and infrastructure. Enhancement of the synergies (latent and patent) between these three would ensure effective decision-making towards a sustainable and clean future. The Sustainable Development Goals adopted by the United Nations recognise that action in one area affects the outcomes in others while highlighting that the balance of social, economic and environmental sustainability shall be considered while striving for development.

The Interim Budget does reflect that India continues to stay on course with its commitment to achieving a green and sustainable future – the determining factor is the pace at which transformative steps may be affected, which include access to international finance, technology transfer and community level awareness and participation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.