As India prepares for the announcement of the Union Budget 2025-26, it is expected that sustainability would appear as a major theme. Stakeholders anticipate greater commitment to ecological resilience and emphasis on environmentally-friendly initiatives oriented to addressing ecological and socio-economic challenges, and achieving established sustainability goals.

It is a logical assumption that this year’s budget would build upon the groundwork laid by the Union Budget 2024-25 featuring the expansion of the PM Surya Ghar Muft Bijli Yojana, a pumped storage policy to integrate renewable energy into the grid, emphasis on nuclear energy with private sector partnerships for Bharat Small Reactors and advancing small modular reactors. Funding for the Green Hydrogen Mission to reduce fossil fuel reliance, climate-resilient crops and promoting natural farming practices,  energy transition pathways balancing growth and environmental sustainability with increased R&D investment in green technologies, green financing mechanisms (including viability gap funding for renewable projects), and tax incentives for businesses adopting eco-friendly practices should be undertaken. The Union Budget 2025-26 is expected to strengthen India’s roadmap toward achieving net-zero carbon emissions by 2070. 

Renewable energy is expected to be a key focus area, considering India’s ambitious targets for the domain, aiming for 500 GW of non-fossil fuel capacity by 2030. The budget should expand the PLI scheme to support local production of solar panels and photovoltaic cells. It should also boost rooftop solar through greater funds allocation for the PM Surya Ghar Muft Bijli Yojana, enabling households to generate solar energy. Provisions for pumped storage would facilitate energy storage essential for the integration of renewable sources like wind and solar. Such measures would expedite the transition to clean energy, decrease India’s carbon footprint, and generate green jobs.

The budget may further focus on green agriculture to foster sustainable growth, supporting research into varieties of crop suited for changing climate conditions to ensure food security and develop climate-resistant crops. Less chemical use and promotion of natural and organic farming must be incentivized. Support should be extended to methods like drip irrigation and AI-driven soil monitoring to optimize resources and encourage precision agriculture. 

With rapid urbanization in the country, the budget must focus on efficient waste management and the creation of a circular economy through allocations for integrated waste management systems enabling recycling and resource recovery, incorporation and advancement of technology in the domain (for example, leveraging AI and blockchain for waste traceability and process optimization),and expanding the  Swachh Bharat Mission with circular economy principles to inspire sustainable and responsible business and individual behaviour. These measures would help decrease waste and foster a circular economy in urban parts.

Moreover, with the growth of urban areas, sustainability must be prioritized through the development of green infrastructure. The budget should focus on environmentally-friendly transportation through the expansion of the PM e-Bus Sewa scheme in cities. Emphasis must be laid on green technologies for energy-efficient buildings and intelligent transport systems to realize the Smart Cities Mission. Also, sustainable housing must be encouraged through tax incentives for environmentally-friendly construction practices in affordable housing.

The corporate sector has a key role to play in driving sustainability. The budget could announce incentives such as tax benefits for investments in green projects to inspire the adoption of renewable energy, and encourage circular business models by offering incentives to organizations adopting extended producer responsibility (EPR) for waste management. 

Areas crucial to the growth of sustainability, such as innovation, research and development (for technologies such as green hydrogen, biofuels, carbon capture), and public-private partnerships could be given greater attention along with a focus on the establishment of a carbon market (with regulatory frameworks for carbon trading and compliance) and policy frameworks to meet climate goals. Low-carbon industries could be incentivised to enable transition to cleaner technologies.

The budget could also make provisions for awareness campaigns to educate citizens on responsible consumption and waste reduction, and for the development of green skills in green technologies to create employment opportunities.