Integrated Approach: The Budget Imperative For India’s Green Energy Transition

In the Budget 2025-26, the clean energy sector saw an outlay of more than ₹26,000 crore. Since the inception of the National Solar Mission in 2010, India has transformed its green energy sector from a low-capacity source into one of the world’s top renewable energy markets.

The progress has been steady, but often under tight fiscal constraints, global market volatility, and domestic development pressure. Over the past two decades, the country transformed from intent to implementation.

'Net Zero' Target

India has made a commitment to become Net Zero by 2070, setting a short-term target of 500 GW of non-fossil fuels capacity by 2030. The next phase will thus demand not just more funds, but a more integrated approach to financial allocation and governing the energy transition itself.

By 2025, India had surpassed over 250 GW of renewable energy (RE) capacity, much ahead of its 2030 non-fossil targets. Globally, this scale of growth places India among the top five RE markets. Moreover, its achievements extend beyond electricity generation. By 2025, India had also reached 20% ethanol blending in petrol, a milestone that surpasses many developed nations.

National Green Hydrogen Mission

In the emerging sector of green hydrogen, the National Green Hydrogen Mission aims for five million tonnes of production by 2032, with a focus on domestic manufacturing and export potential.

This progress was not driven by a single lever.

It emerged from mission-mode policy drivers, such as the National Solar Mission and the National Wind-Solar Hybrid Policy, besides market-based instruments, including solar auctions and renewable purchase obligations, among others.

This scale-up was achieved without a heavy dependence on international support, demonstrating India’s ability to build domestic clean energy markets.

Much of this transition has unfolded amid significant disruptions. Global tariff wars, especially around solar modules, raised costs, and import dependence. The pandemic disrupted supply chains, delayed project execution, and strained state electricity distribution companies (DISCOMs).

Recently, geopolitical tensions have heightened concerns around energy security and critical minerals. Yet, India has shown remarkable resilience. Initiatives such as the Production-Linked Incentive (PLI) scheme have bolstered domestic manufacturing, reducing import dependence, and reforms under the Revamped Distribution Sector Scheme (RDSS) largely stabilised power distribution companies. These adaptations reflect India’s ability to maintain momentum even in the face of global disruptions, ensuring that the energy transition remains on track.

Green Energy Transformation 

But India’s green energy transformation cannot be driven just by central policies. States have a pivotal role to play. For instance, Gujarat and Rajasthan have been leaders in solar deployment, Tamil Nadu in wind energy, and States such as Maharashtra and Uttar Pradesh have made significant strides in ethanol production.

Citizen engagement is also a noteworthy aspect, with the prime example of rooftop solar becoming increasingly popular, empowering households and farmers to become energy producers through the PM Surya Ghar Scheme and PM KUSUM. However, the energy transition in India remains fragmented, reflecting a core issue: the stakeholders have been working, but often in silos and without cross-learning.

There are dedicated Energy Ministries, for petroleum and natural gas (MoPNG), coal (MoC), new and renewable energy (MNRE), power (MoP), and atomic energy (DAE), and their affiliated bodies, such as the Central Electricity Authority (CEA) and power sector enterprises.

Along with this are the DISCOM and State regulators, making it highly cumbersome to plan, implement, and measure progress, often leading to inefficiencies. Glaring examples include biogas, clean mobility, and hydroelectric projects, among others. While some argue that all these Ministries should be unified under a single energy Ministry, a more pragmatic approach would be to unify the budget allocations that are spread across multiple Ministries.

An Integrated Budgeting Framework

As we look towards the upcoming Budget, there is a compelling case for integrated budgeting for energy transition. With such an approach, akin to the integrated budgeting for infrastructure, the country would be able to streamline investments, reduce overlaps, and improve track outcomes using relevant indicators, including green energy production, emissions reduction, energy security, and job creation in the green energy sector.

As India strives towards its Net Zero target, the energy transition must be viewed as a comprehensive national priority and not a sectoral checklist. Furthermore, both Central and State budgetary interventions can be combined to highlight the amount being spent on adaptation and mitigation strategies. This transparent accounting would not only enable it for India to measure its progress, but also send a clear and credible message to the world on the scale at which this transition is financed.  

Further, an institutional innovation, an Energy Transition Council, modelled on the GST Council, would bring together the Centre and all the States, ensuring that both levels of government collaborate effectively, and have a greater implementation impact.

Towards A Collective Effort

This approach would foster both competitive and cooperative federalism, aligning State and national goals, and ensuring that the energy transition is not just a central mandate, but a collective effort.

Moreover, the Council would also ensure continuity beyond political cycles, reinforcing the idea that energy transition is an economic and developmental imperative. 

The budget offers a chance to move from fragmented excellence to integrated impact. While the current policy and practices have put India's green energy at the forefront, the next step will be to govern the transition as an interconnected system, aligning fiscal policy, federal cooperation, and long-term climate goals.

Energy transition is not about individual ministries or schemes; it is about the resilience, competitiveness, and sustainability of the economy.

(Debajit Palit is the Centre Head and Akanksha Jain is a Research Consultant at the Centre for Climate Change & Energy Transition at Chintan Research Foundation. Views are personal.)