India’s Union Budget 2022: What Does it Hold for Climate Action, Energy Access, and Rural Development.jpg
Photo: SELCO foundation

India’s Union Budget 2022: What Does it Hold for Climate Action, Energy Access, and Rural Development?

On February 1, 2022, India’s Finance Minister, Ms. Nirmala Sitharaman, tabled the 2022-23 Union’s budget in Parliament. Climate action and Productivity were among the four pillars shaping this year’s budget, alongside financing investment and the Prime Minister’s  Gati Shakti Plan (momentum for employment), and they offer immense opportunities to advance the Decentralized Renewable Energy (DRE) sector.  

This year’s budget has been notable for its focus on development nexus sectors such as agriculture, small businesses, housing, and village development, which create a space for integrating sustainable DRE solutions. These solutions can not only contribute to climate change adaptation and mitigation efforts but also bring much-needed developmental benefits to poorer communities across the country. Some examples include the push for natural farming, the proposed support for agroforestry among farmers belonging to more vulnerable SC and ST (backward castes) communities, the increased allocation and targets for affordable housing under PM Awas Yojana, and the Vibrant Villages Programme that seeks to develop border villages with sparse populations including through the provision of DRE.

Of the various announcements, below, we highlight some of the most notable inclusions in the budget for development nexus sectors and outline the opportunities for India and its last-mile communities to strengthen climate action alongside rural development and productivity, and energy access.

Agriculture and the Focus on Millets

In the build-up to the International Year of Millets 2023, the budget discussed support for enhancing the domestic production and consumption of millets and millet products. A large part of the agriculture economy in India today is bearing the brunt of climate change with severe and recurring droughts. Studies suggest that more than 75% of districts across the country are vulnerable to climate risks including floods and drought.

In the context of mitigating the impacts of drought, promoting millets that are climate-resilient, suitable for arid regions with low water availability,  and also nutritious, can bring significant benefits to local communities in terms of income generation opportunities, health, and wellbeing. DRE  and efficient appliances can be plugged-in along the value chain for millets, from the input and production phases to post-production and processing. Solutions are already being implemented that integrate sustainable energy within the various phases of millet processing- from grading, destoning, hulling and pulverizing.

An example is the solar-powered millet processing unit, owned and managed by the Sitting Organic Farmers Association (SOFA). located in a remote village of Tamil Nadu. Implemented in 2017, it has doubled the production capacity of the association, while also reducing the expenditure on electricity bills. This has meant increased income for the members, reduced transportation costs, and better access to milling services for the local community.

State-level initiatives such as Karnataka’s Raita Siri Scheme, Odisha Millet Mission provide templates and models for an integrated value chain for millets by supporting cultivation through small farmers and by enabling market linkages and procurement for government and community needs. Building on their learnings and successes, there is scope to strengthen the national-level initiative. The initiative could be designed to assess the equipment and energy needs of small farmers, Farmer Producer organizations (FPOs), and Self Help Groups (SHGs) to create decentralized processing units for self-consumption, public procurement, and trade in the larger domestic and international markets. This can also help move the needle in realizing India’s Statement of Intent, put out in partnership with the UN’s World Food Programme, to make the country a global leader in mainstreaming millets.

Startups and Rural Enterprises and the Link to Last-Mile Financing 

The announcement of a blended capital fund facilitated through NABARD (National Bank for Agricultural and Rural Development) to finance Agri start-ups and rural enterprises across the farm produce value chain has the potential to boost activities in support of FPOs and enable modernization through machinery rentals and technologies for farming communities.

Going beyond the urban English-speaking entrepreneurs in the start-up space, it would be heartening to see how this fund could be mobilized to support the incubation and growth of local, rural entrepreneurs in this sector. The recently launched Atal Community Innovators Center (ACIC) clearly articulates the need and the government’s interest to support such entrepreneurs. The fund should therefore create provisions to cater to their needs by converging with schemes that provide patient capital and soft funds to support the ecosystem development. Incubation centers are already working with local innovators to support the manufacture, and scale-up of agriculture-based appliance innovations that can bring together energy efficiency and sustainable energy, for example, on aspects of on-farm mechanization such as seed sprayers and de-weeders, as well as post-harvest processing for rice and so on.

This enterprise-level support in the farm value chain can be supplemented with low-cost, affordable credit and financial assistance through schemes such as Agriculture Infrastructure Fund, Prime Minister’s Employment Generation Programme (PMEGP), and so on. This can enable individual farmers, and groups to purchase DRE-powered solutions- on-farm equipment, cold storage solutions, and small processing equipment for spices, millets, rice, and so on.

Energy Solutions in Early Childhood Development

Another significant highlight of the budget has been on enhancing Anganwadi centers that provide basic health care, nutrition, and education, among others, to women and children. Under the government’s Saksham Anganwadi initiative, infrastructure and audio-visual aids are planned for 200,000 Anganwadis, and allocations were made to power them with decentralized renewable energy. This can revamp early childhood education using digital learning aids, enhance basic comfort for children and young mothers with lighting and fans, and ensure critical water access in these centers using solar-powered pumps.

To witness lasting improvements in socio-economic and health indicators among children and mothers, this effort of infrastructure development using clean energy solutions can be extended along the maternal and child care value chain. This means strengthening infrastructure not just for Anganwadis but also in primary healthcare facilities, many of which are located in remote and difficult terrain with unreliable power access. These include equipping them with solar-powered efficient equipment such as baby warmers, spotlights for deliveries, and the cold chain for immunization and vaccine delivery.

The Union budget 2022-23 has provided a vision for climate action and productivity and created a space for integrating sustainable energy solutions. In the context of building back better post the successive waves of COVID 19, sustainable solutions that democratize and decentralize energy access across sectors will be key. But for the benefits of DRE to reach the last mile, the financial allocations, and technology interventions envisaged in the budget need to be customized and supported with appropriate training for end-users and holistic ecosystem building. The evidence needed for key stakeholders to make more informed decisions on DRE solutions needs to be built and shared. The opportunities created through the Union budget can be seized to institutionalize sustainable energy in each sector of development and demonstrate the added value to the twin objectives of climate action and rural development. 

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