Budget 2025: Clean Energy Gets Big Boost, But Key Environmental Action Lacking, Say Experts
The Rs 20,000-crore Nuclear Energy Mission to deploy small modular reactors by 2033 is significant, but experts caution about funding, safety, and the risks compared to other renewable sources
The Union Budget 2025 reaffirmed India’s commitment to clean energy, prioritising domestic manufacturing of renewable components, and launching a Rs 20,000-crore Nuclear Energy Mission. It, however, missed a crucial opportunity to address pressing environmental issues like escalating air and water pollution, said policy experts.
The focus on promoting domestic manufacturing in key sectors like solar PV cells, EV batteries, wind turbines, and grid-scale energy storage was widely welcomed. Additionally, removal of basic customs duty on cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 additional critical minerals is also expected to reduce input costs and scale up recycling capacities.
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“At present, for many clean energy equipment manufacturers, it is increasingly becoming difficult to compete with Chinese giants on artificial selling costs and overcapacities. The National Manufacturing Mission is significant, but it must be followed up through inter-ministerial actions and close collaborations between state and central governments," said Rishabh Jain, senior programme lead, CEEW.
BIG BOOST TO NUCLEAR ENERGY
While presenting the Budget, Union finance minister Nirmala Sitharaman announced a Rs 20,000-crore Nuclear Energy Mission, aimed at deploying at least five indigenously developed small modular reactors by 2033.
“Energy security has received greater attention in the Budget, with consistent focus on solar, wind and, this time, nuclear energy, with small modular reactors," she said, adding that the Centre will bring two amendments in the Atomic Energy Act and Civil Liabilities For Nuclear Damages Act for active partnership with private sector.
While experts agree that this is a positive step and will definitely diversify India’s energy mix, they highlight that the journey from 8.2 GW today to 100 GW in 22 years will require a series of interventions.
“At the same time, a renewed push is needed in the short-term to meet the existing solar, wind, and energy storage targets by 2032, for that significant steps are expected throughout the year," said Ruchita Shah, energy analysis, Asia, Ember.
Terming the announcement “bold and significant", sustainable finance specialist Labanya Jena said the decision comes with high capex and tail risks. “The key challenge remains – who will fund it and who will bear the risks," he said.
Another concern is safety, waste management, and security risks of nuclear energy that are more expensive than other safe and proven renewable energy sources like wind and solar.
MISSED OPPORTUNITY FOR ENVIRONMENTAL ACTION
Policy experts highlighted a lack of sufficient environmental funding in the Budget. “The focus on clean energy is a positive step, but it misses the opportunity to address critical environmental issues such as air and water pollution, waste management, and industrial pollution," said Dr Chandra Bhushan, president and CEO of iForest.
Dr Shailly Kedia, associate director, sustainable development and outreach at TERI, said the ministry of environment, forest and climate change received only a 2.5 per cent increase (Rs 3,412.82 crore), while the overall budget grew by over 7 per cent.
“Key sustainability issues – such as waste management, coastal resilience, and biodiversity – are absent from the Output Outcome Framework for 2025-26. India’s economic growth must not come at the expense of environmental collapse," she added.
Experts further said targeted initiatives addressing air pollution, river rejuvenation for water security, and adaptation measures beyond agriculture would have further reinforced India’s vision for a cleaner and greener future.
ADAPTING TO CLIMATE CHANGE
The Budget also outlined the Prime Minister Dhan-Dhaanya Krishi Yojana aimed at improving agricultural productivity in 100 low-output districts by promoting crop diversification, enhancing post-harvest storage, and improving irrigation to strengthen India’s climate adaptation efforts.
“While it has certainly acknowledged the need to boost agricultural production and resilience, it fell short where it matters most – adaptation funding," said Harjeet Singh, climate activist and founding director, Satat Sampada Climate Foundation. “Without real investment in climate adaptation, farmers will be left defenseless against increasingly erratic and extreme weather. The livelihoods of millions are at serious risk and, without urgent action, our food systems and rural communities will bear the brunt of the climate crisis."
SOLAR ENERGY GETS MOST, FOCUS ON POWER DISTRIBUTION
Solar energy, meanwhile, got the highest allocation of Rs 24,224 crore, with a clear focus on rooftop solar with the PM Surya Ghar Yojana. “The announcement for a nuclear mission is also a clear indication that the government is looking at options to decrease its baseload reliance on coal. However, the issues of safety associated with nuclear energy still loom large," said Aarti Khosla, director, Climate Trends.
Experts welcomed the focus on strengthening electricity distribution with plans to incentivise states to adopt critical reforms like smart metering. “The Union Budget 2025 emphasises the government’s strong commitment to meeting rising energy demands… A key highlight is the emphasis on strengthening electricity distribution, with plans to incentivise states to adopt measures like smart metering, which is the need of the hour," said Anil Rawal, MD and CEO of IntelliSmart Infrastructure.
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