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What Does the 2021 Union Budget Do To Improve Air Quality?

What Does the 2021 Union Budget Do To Improve Air Quality?

A man crosses a road amidst heavy smog in New Delhi, November 2016. Photo: Reuters/Adnan Abidi.

This year’s budget comes in the shadow of the COVID-19 pandemic and the many disruptions it has wreaked on society, the economy and the government’s priorities. One expectation from the budget was an emphasis on public health and the major risk factors. The Global Burden of Disease assessments have shown air pollution is the second largest public health risk factor in the country, after malnutrition. And so did the budget address clean air adequately?

India’s air pollution crisis is a ‘wicked problem’ that is deeply embedded in a bewildering range of sectors and governance issues. Air quality management (AQM) spans measures such as industrial emissions control, improved waste management, better public transport and cleaner fuels for household cooking. Budgetary allocations of interest, therefore, include both funds earmarked for AQM like the 15th Finance Commission (FC) grants and the National Clean Air Programme (NCAP), and those addressing sectoral needs that also improve air quality.

FC grants sustained

In her budget speech, Union finance minister Nirmala Sitharman announced Rs 2,217 crore for 42 urban agglomerations with million-plus populations “to tackle the burgeoning problem of air pollution”. The allocation follows recommendations of the 15th FC report for 2021-2026, tabled in parliament shortly after Sitharaman’s budget speech, to provide performance-based grants to urban local bodies (ULBs).

The Union environment ministry will be the nodal agency to monitor performance. For 2021-2022, the 15th FC has prescribed indicators measuring improvements in air quality directly and those tracking intermediate outputs like monitoring networks, source attribution studies and progress on action plans.

The government first introduced these grants in the previous budget with an allocation of Rs 4,400 crore. They were based on the 15th FC’s interim report for 2020-2021 and were to be released in two tranches: 50% unconditional upfront and then based on performance in the last quarter.

After many delays, the government released the first tranche of Rs 2,200 crore in November 2020. This amount may not be spent fully since the ULBs were underprepared to absorb these funds.

The total grant amount has been reduced by nearly half in this year’s budget, without a clear justification. This said, since their introduction last year, the potential and the limitations of these grants have also become clearer. Several measures to tackle industrial and vehicular emissions, for example, fall under other agencies that can’t use these grants. Therefore, in and of itself, the reduction in the budget is not a big cause for concern.

Importantly, the 15th FC recommends these annual grants for the next five years, with the outlay increasing year-on-year, up to Rs 2,621 crore in 2025-2026. These grants therefore provide a predictable and significant source of funds in the medium term to ULBs, explicitly tied to demonstrable improvements in air quality. So the grants represent an important step forward for mainstreaming air quality in municipal governance.

That said, while welcome from an air quality perspective, the strings attached with these grants restrict the autonomy of local governments on how they use the money.

NCAP remains poorly funded

Fund adequacy should instead be judged based on NCAP allocations. The 15th FC grants complement the NCAP: only ULBs can utilise them, and they are meant only meant for million-plus cities. So NCAP remains the only route for financial support to 90 of the 124 non-attainment cities — i.e. those identified under NCAP to not be conforming to the national air-quality standards. In fact, even for the million-plus cities receiving FC grants, NCAP remains the only route for AQM-specific funds from the Centre to key state government agencies, such as the state pollution control boards and the transport departments.

There is no marked increase for NCAP this budget. Allocations for “Control of Pollution” have increased slightly, from Rs 460 crore last year to Rs 470 crore this year. The environment ministry itself had projected a need for Rs 660 crore under this line item for 2020-2021.

Also read: As NCR Sputters, 1981 Law to Fight Air Pollution Gathers Dust

Consider the following: in the first year of NCAP (2019-2020), the government distributed Rs 300 crore among 102 cities, with the largest cities receiving Rs 10 crore each – and those like Guwahati getting only Rs 20 lakh. Installing just one air-quality monitor costs Rs 1.2 crore.

Worryingly, against the already modest allocation of Rs 460 crore for ‘Control of Pollution’, the revised estimates this year are down to Rs 280 crore, suggesting a significant reduction in the environment ministry’s spending on NCAP. Overall, against a budget estimate of Rs 2,942 crore for the ministry, the revised estimate for 2020-2021 is Rs 1,970 crore. Evidently, the government perceived protecting the environment to be a luxury during the pandemic.

Modest support for airshed management

Since air pollution is not limited to city boundaries, mitigation efforts also need to go beyond city limits and address the larger airshed. The NCAP has been city-centric thus far. The 15th FC’s attention towards urban agglomerations could help expand efforts to metropolitan regions.

The new Commission on Air Quality Management in the National Capital Region and Adjoining Areas (CAQM) is a significant milestone in this direction – even if the ordinance that created it had major limitations. Unlike the Environment Pollution (Prevention and Control) Authority (EPCA) – the agency it replaced – the CAQM can have full-time staff, commission scientific studies and has significant regulatory powers. The government has allocated Rs 20 crore for it this year.

Fund adequacy is hard to judge at this stage since the plan for CAQM’s functions remains opaque. The Central Pollution Control Board’s budget has remained unchanged for the last three years, at Rs 100 crore.

Mixed bag for sectoral measures

The finance minister announced that the government would extend the Ujjwala programme to another one crore beneficiaries. Ujjwala has been an important intervention to improve air quality, as households burning traditional solid fuels for cooking and space-heating account for about 30% of outdoor pollution. Increased household access to cleaner fuels like LPG will help. However, our experience so far also suggests that providing the LPG connection itself is insufficient. The government needs to increase support to ensure households continue to use LPG.

Unfortunately, the allocation for LPG subsidies has been slashed from Rs 35,605 crore last year to just Rs 12,480 crore. Since May 2020, LPG subsidies have essentially been discontinued – although the government provided three free LPG cylinders to Ujjwala beneficiaries, as part of the relief package. The Centre has thus missed an opportunity to revamp LPG subsidies and increase support for poor households – a policy that could have addressed air pollution exposure and doubled up as social protection as well.

Other sectoral announcements could help improve air quality, especially in the longer term. One in particular is a new scheme to augment public transport infrastructure, with an allocation Rs 18,000 crore; another is a vehicle scrapping policy. Both are in the offing although we don’t yet have many details. Finance minister Sitharaman also highlighted construction and demolition dust while announcing the second round of the Swachh Bharat Mission, as well as investments in green energy.

In summary, the budget offers both positive points and big gaps. The 15th FC grants definitely represent a bright spot and the country needs to use them well. The allocations towards public transport, Swachh Bharat and green energy also hold promise. On the other hand, the reduction in LPG subsidies is an important opportunity gone, and it could limit the benefits from the Ujjwala scheme. And with the NCAP continuing to receive less money than it needs, it seems the Union government will pay little attention to key mitigation efforts.

Santosh Harish is a fellow at the Centre for Policy Research, New Delhi. He tweets at @santoshharish1. The views expressed here are the author’s own.

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