Budget 2026: The Imperative For A Circular Economy

Reuse, Repair, Recycle

The increasing toxic waste trail has reimposed the narrative for a transition from the linear "take-make-dispose" model to a "reuse, repair, and recycle" strategy in waste management. The imperative for a "circular economy" has never been so demanding.

“The rising material demand amid geopolitical challenges has made a circular economy a strategic imperative for our national security and sustained economic growth," says Akanksha Tyagi, Programme Lead, Council on Energy, Environment and Water (CEEW).

According to CEEW research, circularity in seven sectors alone offers a potential ₹11.5 lakh crore ($132.2 billion) worth of annual market by 2047. This will help create 8.4 million full-time equivalent (FTE) jobs and attract ₹10.8 lakh crore ($124.8 billion) in investments, she points out.

According to Tyagi, the budget should announce a "National Mission on Circular Economy" to drive concerted efforts into the sector and seize the economic growth moment.

Tamil Nadu's Circular Economy Bid

Recently, the Tamil Nadu government released the "Circular Economy Policy", in an effort to provide incentives to eligible recycling facilities. The policy framework covers sectors such as textiles, automobiles, and electronics, among others.

As per reports, about 31,000 metric tonnes of e-waste are generated every year in Tamil Nadu. This waste management strategy is touted as a decisive step towards sustainable growth by envisaging measures to reuse the piles of e-waste generated over the years, in line with global sustainability standards.

This is expected to raise the stakes for global competitiveness in emerging sectors, including energy. The EU-India Resource Efficiency and Circular Economy Initiative (EU-I RECEI) project was also launched (last year) in Tamil Nadu.

Regenerative Economic Model

In a circular economy, a regenerative economic model is adopted so that the waste produced in various production units doesn't really end up in the dump yard — rather, it is regenerated, reused, and refurbished, integrating it back into the production system. It revolves around the sustainability factor and the 'R' framework: Reduce, reuse, repair, refurbish/remanufacture, recycle, and recover.

According to an article by the WEF, a circular economy could provide a second source of supply for critical minerals and other resources, which would not only protect the environment but also boost the economy.

Previous budgets have made significant announcements promoting a circular economy. Union Budget 2025-26 had offered a slew of incentives and announced policy revamps under "credit notes" to facilitate shipbreaking in Indian yards and, thereby, promote the circular economy.

GOBARdhan Scheme

The GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme, which was introduced in the Union Budget 2018-19, provided a fillip to the "waste-to-wealth" model through the establishment of 500 new “waste-to-wealth” plants at an investment outlay of ₹10,000 crore (this was announced in the Union Budget 2023-24).

The PM Surya Ghar Muft Bijli Yojana, which was launched on February 13, 2024, is also touted to promote the circular economy. The national initiative has been aimed at boosting rooftop solar installations in one crore households and providing free electricity (up to 300 units monthly), besides giving subsidies for setting up solar panels, at a total outlay of over ₹75,000 crore. The scheme could significantly promote the circular economy by maximising resource value, reducing waste generation through the 'R' framework.

PM Surya Ghar Muft Bijli Yojana

"While the scheme has already achieved nearly 27% of its 10-million-household target, this progress is just the tip of the iceberg. India has a realistic residential rooftop potential of 118 GW, accounting for current consumption levels. To bridge the gap and tap into immense potential, the upcoming Budget must prioritise additional fund allocations, alongside a strategic focus on grid modernisation and deeper digital integration between state DISCOMs and the National Portal, combined with a decisive plan to resolve Domestic Content Requirement (DCR) supply chain bottlenecks. This will help in truly democratising clean energy for every Indian rooftop," says Bhawna Tyag, Programme Lead, CEEW.

Besides being the primary sources of power generation, what connects these various energy sources is the trail of toxic waste they leave behind in the environment. The burning of fossil fuels releases a range of air pollutants, including greenhouse gases, and solid waste.

Nuclear energy produces radioactive waste. From 2018 to 2022, India generated approximately 4,468 cubic meters of solid low and intermediate-level solid radioactive waste (LLW/ILW) at nuclear power plants. And renewable energy sources, though they do not generally emit toxic components, could produce waste in the form of depreciated equipment or e-waste.