Unlock the Market Insights: India's Union Budget and Climate Action Strategy

The Indian economy has shown significant growth in the last fiscal year , with the real Gross Domestic Product ( GDP ) estimated to have increased by 8.2 % in FY 2023 - 24 , compared to the 7 % growth seen in FY 2022 - 23 . Real Gross Value Added ( GVA ) also saw an increase to 7.2 % in 2023 - 24 from 6.7 % in 2022 - 23 . Despite this growth , there has been a slowdown in all sectors at current prices.

The Micro , Small and Medium Enterprises ( MSMEs ) sector contributes significantly to the Indian economy , with the share of MSME Gross Value Added accounting for about 30 % of the overall GDP . The share of MSME manufacturing compared to All India Manufacturing is around 36 % , and MSME related product exports make up around 45 % of total exports . The number of persons employed in MSMEs as of 05 February , 2024 , is 16,86,64,562.

However , reports from NITI Aayog and the World Bank highlight the environmental impact of MSMEs , with the carbon footprint of MSMEs accounting for around 3 - 4 % of India 's total carbon emissions . India has various laws on Environment , Social , and Governance ( ESG ) , with SEBI mandating disclosure requirements under the Business Responsibility and Sustainability Report ( BRSR ) for listed entities . Countries worldwide have adopted measures for net zero carbon emissions , with the European Commission implementing the Carbon Border Adjustment Mechanism ( CBAM ) regulation that could impact Indian exporters.

The upcoming Union budget in India will be crucial for addressing climate change challenges . India is currently ranked seventh on the list of most - vulnerable countries in the world , and the Reserve Bank of India has identified increasing climate shocks as a risk to the economy . The budget will play a vital role in shaping India 's climate action , with fund allocations supporting government ministries , departments , and on - ground activities . With the need to prioritize climate - relevant activities , the budget has the potential to drive sustainability efforts and incentivize private players to commit resources.

The budget could consider special deductions or tax incentives for expenditures related to ESG implementation , aiming to support Indian exporters in adhering to international regulations like CBAM . Incentives could be provided for various initiatives , including procurement from SMEs , investment in ESG - compliant companies , and transitioning to low carbon practices . The focus on Renewable energy and sustainability in the budget could accelerate India 's climate action efforts and contribute to achieving the goal of increasing renewable electricity installation capacity to 500 GW by 2030 . Overall , the budget has the opportunity to make climate action a central aspect of India 's development story and set the stage for a greener future.