Finance Minister Nirmala Sitharaman presented the Union Budget for 2026-27 on February 1, unveiling a financial blueprint that arrives amid escalating climate pressures across India. The country faces mounting challenges from catastrophic floods, cyclones, and abnormal monsoons that have caused billions in damages and devastated agricultural sectors.
A Mixed Bag for Climate-Vulnerable India
This year's budget presents a complex picture for addressing India's climate vulnerabilities. While substantial investments target industrial decarbonization and green technologies, critical gaps remain in building community resilience against climate impacts.
Industrial Decarbonization Takes Center Stage
The government's financial commitment to industrial decarbonization emerges as a clear priority. A significant allocation of Rs 20,000 crore over five years targets Carbon Capture, Utilisation and Storage (CCUS) technologies, specifically focusing on hard-to-abate sectors like steel, cement, and power generation.
Several fiscal measures reinforce domestic manufacturing capabilities for renewable components:
- Basic Custom Duty on Monazite reduced from 2.5% to nil
- BCD exemption for sodium antimonate to boost solar glass manufacturing
- Extended capital goods exemption for Battery Energy Storage Systems machinery
- Import duty exemption for Nuclear Power Projects extended until 2035
- Excise duty exemption for biogas in blended CNG to promote clean energy
The establishment of New Rare Earth Corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu will strengthen the supply chain for minerals essential to turbines and batteries, supporting India's renewable energy ambitions.
Agricultural Resilience and Technological Integration
The budget introduces innovative approaches to climate-proof agriculture, moving beyond traditional support mechanisms. The launch of Bharat-VISTAAR (Virtually Integrated System to Access Agricultural Resources) as a pilot project represents a significant technological advancement.
This multilingual AI tool integrates data from AgriStack portals with ICAR agricultural principles to provide farmers with:
- Accurate weather forecasts and advisories
- Personalized risk-optimized crop planning tools
- Interest-free loans for previously unbanked farmers
Strategic crop diversification initiatives target specific regions:
- Coastal regions focusing on high-value crops like cashew, cocoa, and sandalwood
- Hilly areas developing nut plantations including almonds and walnuts
- Coconut Promotion Scheme to replace non-productive trees
The government has set ambitious targets to transform "Indian Cashew" and "Indian Cocoa" into leading global brands by 2030 through raw material self-sufficiency initiatives.
The Adaptation Gap: A Critical Oversight
Despite these forward-looking measures, the budget reveals a significant disparity between mitigation efforts and adaptation funding. While billions flow toward reducing future emissions, resources specifically earmarked for climate adaptation remain fragmented and insufficient.
The most glaring omission is the absence of a centrally-funded flagship "Climate Adaptation" mission comparable to other national initiatives. Although the 16th Finance Commission has allocated grants for disaster management, there is minimal direct spending for building infrastructural systems capable of withstanding extreme weather events like super cyclones.
This adaptation gap becomes particularly concerning given India's estimated need for $2.5 trillion by 2030 to adequately shield against climate change impacts through financial allocations.
Energy Security and Future Investments
The budget's emphasis on long-term energy security includes substantial commitments to nuclear power and renewable technologies. These investments represent significant capital expenditures that promise both energy security and low-carbon development pathways for India's growing economy.
However, the current allocations fall short of addressing immediate climate vulnerabilities faced by communities across the country. The budget's mitigation-oriented approach, while technologically ambitious, leaves critical adaptation needs underfunded and underprioritized.
As India navigates increasing climate pressures, the 2026-27 budget establishes strong foundations for industrial transformation but requires more balanced attention to building human and infrastructural resilience against the climate challenges already at India's doorstep.
