India must invest big money in climate mitigation and resilience: Did budget makers miss the memo?

Yet, Union budgets for the past 10 years show a stubborn gap between recognition and resourcing.

Every budget season brings renewed climate promises, but allocation and implementation remains grossly inadequate.

Even a generous count of solar subsidies, electric vehicle schemes, irrigation programmes and so on reveals that climate-related federal spending has reached perhaps 1.5% of GDP. The government’s own estimate says it needs three times that amount.

The annual budget of the ministry of environment, forests and climate change, which hovers around ₹3,000 crore, is barely a footnote in total central expenditure of ₹48 trillion.

The government spends 70 times more on defence and 170 times more on debt servicing. The climate has high salience in speeches but a low claim on actual spending.

More telling is how public money is spent. Budgetary funds favour mitigation, which includes renewables, electrification and efficiency, while adaptation remains marginal, fragmented and largely invisible.

The ministry of new and renewable energy saw its budget jump from ₹7,563 crore to ₹19,100 crore in two years. Electric vehicles and solar installations have been driven by subsidies.

Preparing for climate impacts already underway remains orphaned. Heat stress, floods, water scarcity and crop losses are treated as episodic shocks rather than as predictable economic risks requiring sustained investment.

A National Adaptation Fund formally exists, but receives just ₹100-300 crore yearly, which is often underspent. Set that against ₹10,000 crore plus in damages from a single major cyclone, or billions lost to heat stress reducing worker productivity.

The disparity isn’t accidental. Mitigation, or reducing planet-warming emissions, attracts roughly three-quarters of climate-related spending. Adaptation gets the remainder, scattered and untracked.

Flood protection money is part of disaster relief. Drought resilience hides in a rural employment scheme. Heat preparedness barely exists as a budget allocation head. A few states have filled this vacuum.

Odisha now identifies ₹36,065 crore as climate-relevant, nearly half its total budget. Rajasthan published its first climate budget, estimated at ₹2.78 trillion.

These exercises create accountability. The Centre has done neither.

This matters because budget choices shape ground realities. States bear most direct climate costs, whether they arise from crop failures and infrastructure damage or emergency responses and other needs.

Yet, the Finance Commission formula for distributing Union tax revenues among states seems to ignore climate vulnerability. Odisha faces annual cyclones. Rajasthan battles desertification. The transfer formula treats this as irrelevant.

Union budgets appear to assume private capital will bridge the gap. However, green bonds constitute less than 1% of government borrowing. Critically, private investment chases profits.

Solar farms, for example, earn returns. In contrast, adaptation infrastructure—like cyclone shelters, heat-resistant public spaces and flood-resilient urban infrastructure—generates no private profit.

The result is a paradox. Climate risks are acknowledged as a threat to growth, yet climate spending is not treated as a growth-critical investment. Bridging this gap does not require fiscal recklessness. It needs fiscal clarity.

What would credible climate budgeting look like? First, the Centre needs to make climate spending visible. A formal climate budget statement, like the recent gender statement, would force a reckoning between ambition and allocation, and enable parliamentary scrutiny.

Second, adaptation must be treated as infrastructure. Protecting cities from floods, farms from droughts and workers from heat is as essential to long-term growth as highways or power plants.

This means long-term public investment, not episodic relief. We need to finance it through capital budgets and long-term borrowing, not rely on year-to-year discretionary spending.

Third, climate priorities must shape how money is spent. Choices between grey infrastructure and nature-based solutions, between road expansion and public transport, and between fertilizer subsidies and soil resilience are actually climate calls.

Finally, we must reform federal transfers. Make climate vulnerability a Finance Commission criterion to ensure states bearing the highest climate costs receive appropriate central support.

None of this requires a new bureaucracy. The tools of budget classification, capital expenditure frameworks and devolution formulas already exist.

For a decade, the climate has featured prominently in Economic Surveys and budget speeches. But money must match the rhetoric. Climate threats are not hypothetical. They are causing clear economic losses measurable in GDP terms.

India’s climate challenge could steepen. A warming planet is already impacting productivity, inflation, public health and fiscal stability. The Union budget has mastered the climate vocabulary.

It now needs to include climate economics by translating recognition into resources and aspiration into allocation. At stake is not just climate credibility, but how smoothly the economy emerges from here onwards.

The author is an independent expert based in New Delhi, Kolkata and Odisha. Twitter: @scurve Instagram: @soumya.scurve.