Budget 2026: India Must Speed Up and Strengthen Its Climate Transition
Upcoming fiscal policy offers a critical opportunity to scale renewable energy, green hydrogen, and climate resilient infrastructure while strengthening India’s global leadership in sustainability.
India, Jan 31 : As India prepares to present the 2026 Union Budget, the nation faces a pivotal moment in its climate journey. Previous budgets have sought to convert ambitious environmental pledges into actionable programs, with measurable progress in renewable energy capacity, rooftop solar adoption, and the early stages of a green hydrogen ecosystem. While these steps are commendable, they underscore the need for the 2026 Budget to both accelerate and deepen India’s climate action. Climate related disasters alone cost the country an estimated $12 billion in 2025, a figure expected to rise sharply in coming years.
The 2023-24 Budget marked the first significant pivot toward climate-aligned fiscal policy, focusing on renewable infrastructure and distributed energy access. Notably, the National Green Hydrogen Mission (NGHM) was launched to catalyze domestic clean hydrogen production, with long-term benefits for decarbonization and industrial competitiveness. In the following fiscal year, the NGHM allocation doubled to Rs 600 crore, reflecting a shift from strategy to implementation, with emphasis on electrolyser capacity, domestic manufacturing, and innovation support.
India’s renewable energy transition has gathered momentum in recent years. Under the PM Surya Ghar: Muft Bijli Yojana, launched in February 2024, rooftop solar adoption has surged, with nearly 24 lakh households generating approximately 7 GW of clean power as of December 2025. This brings the program close to a quarter of its 2026-27 target of one crore households.
Despite these gains, investment levels remain insufficient to meet India’s ambitious climate goals. Key areas such as long-duration energy storage, climate-resilient agriculture, and industrial decarbonization still require robust budgetary support. Strengthening these sectors would enhance domestic energy transition efforts and bolster India’s global climate leadership.
Viability Gap Funding (VGF) could play a critical role in scaling private investment for offshore wind projects and energy storage. In 2024, a Rs 7,453 crore VGF scheme was approved for offshore wind, while battery storage funding has fluctuated but remains a strategic priority. Carbon Capture Utilization and Storage (CCUS), with projected costs of Rs 38,900 crore, is another candidate for targeted financial incentives.
The 2026 Budget could also reinforce climate resilient agriculture by supporting soil health, crop diversification, agroforestry, and expanded access to credit through the Kisan Credit Card scheme, particularly for women and smallholder farmers. Strengthening post harvest infrastructure and boosting self-reliance in edible oilseeds and pulses would further enhance resilience and food security.
Additionally, the National Green Taxonomy, aimed at defining “green” economic activity and guiding capital flows, must be finalized in alignment with global standards while remaining contextually relevant for India.
While India’s green journey, supported by the 2023-24 and 2024-25 budgets, has delivered tangible results rising renewable capacity, rooftop solar adoption, and the growth of green hydrogen the scale of the climate challenge demands bold fiscal action. Future policy must prioritize climate-resilient infrastructure, water and waste management, and standardization of sustainability practices. Only through decisive and comprehensive budgetary measures can India meet its climate targets and ensure long-term ecological and fiscal stability.
