Budget: PC may give push to green products today

NEW DELHI: How green will finance minister P Chidambaram's Budget 2008 be? On the FM's table, there are ambitious proposals that may find their way into the Budget. Consumers buying green products could end up paying less for white goods like refrigerators and microwave ovens, if one such proposal finds favour with the finance minister. Incentives may also be on the cards for manufacturers entering what promises to be a lucrative green-technology market. A 'green venture fund', which could provide seed capital to municipalities ready to undertake citywide energy efficiency along with private partners, is also under consideration. For consumers, the government has a scheme to rate some electrical consumer products on their energy efficiency. The Budget could provide excise relief to products with better ratings, reducing the retail price of such products. The incentives for energy-efficient appliances and products could get extended to vehicles when there is a rating scheme for the automobile sector. An excise duty reduction on buses has also been recommended to the FM as part of a larger policy to decongest city roads and reduce the carbon footprint of India's burgeoning automobile fleet. At present cars and other modes of personal transport attract lower excise rates than buses. The urban development ministry has sought this correction in the duty regime to raise a greener fleet of urban public transport. The government, as mentioned in the Economic Survey released on Thursday, has indicated that the challenge of going green using relatively costlier clean technologies has to be woven into larger development goals. This is a sign that while some fiscal carrots could surely be offered, radical measures would wait. The odds favour caution on part of Chidambaram because of a string of state polls this year leading to general elections next year. Also, with a national strategy document on climate change expected soon, the Budget might look at offering incentives to industry for adaptation to cleaner technology. Such technology is not cheap, and so five-year tax breaks can be considered for industries which commit a certain level of investment to green measures, felt government sources involved in drafting the climate change strategy. The finance minister can also signal the government's recognition of the threat of worsening climate with measures to encourage development of homegrown green R&D. This could be done by hiking the budgets for research projects aimed at seeding green technology and providing incentives to industries willing to be proactive in this field. The new and renewable energy ministry is hoping that the FM will give his nod to subsidies for generation of solar power with plants contributing up to 5MW to the main grid. After many false starts, the government looks at a 50MW target during the 11th Plan period as realistic. A plan for duty restructuring to allow cheaper imports of windmill components is also said to be in the works. So far, duty concessions are available only on import of complete kits. A depreciation incentive has also been suggested for those wishing to enter the wind energy market. Apart from the finance ministry's steps, the ministries of oil, coal and power are expected to step up their energy efficiency as mandated under the 11th Plan. ONGC, for instance, is developing a carbon capture and storage system to minimize emissions during exploration while industry as a whole has invested Rs 70,000 crore in projects which can earn carbon credits. Coal India is going back to underground mining, a measure that would bring down emissions. The framework for a fairly comprehensive climate change strategy is already in place. The Prime Minister's council on climate change is close to finalizing a national action plan. The question is how far the FM will go to show that his heart beats for the environment as he says it does for the kisan and the aam admi . Here, the government's pre-occupation with social sector schemes, under the flagship programme, might hog his attention. The Plan outlay for the environment and forest ministry might only increase slightly. From last year's allocation of Rs 1,351 crore, it could be around Rs 1,500 crore. This is less than the Rs 1,750-1,800 crore the ministry was earlier expecting. But this would not mean more than a stumble if the government announces measures to encourage green initiatives by the private sector. "Over 85% of the work and investment on renewable energy is done in the private sector," a ministry official said. Of the forest and wildlife conservation projects, tiger conservation has already found adequate fiscal support this year with the cabinet clearing a special package for relocation of villages from tiger reserves as well as their management. However, other key programmes under the ministry might need more money.