Picking the clean energy pocket

Aug 05 2014, 01:30 IST
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SummaryMisuse of the fund is the symptom of a larger gap between bureaucratic intent and actual practice

The finance minister announced in his Budget speech that he would enhance the resources of the “clean energy fund” by doubling the cess on coal production from Rs 50 per tonne to R100 per tonne. This fund was set up in 2000 to incubate, encourage and develop innovation in clean energy.

A few days after his speech, I read that a significant percentage of the funds would be allocated to cleaning the River Ganga. I asked a senior finance ministry official at an “on the record” gathering of CEOs whether this report had substance. I also asked why the fund was being managed by the finance ministry, and not the ministry of non-conventional and renewable energy. The latter, after all, had the domain expertise. The answer was honest and revealing. The official said the “clean energy” fund covered more than just clean energy. It supported all projects related to the environment. He implied that “environment” is a capacious term under whose umbrella many seemingly unrelated projects can take shelter. He agreed that the finance ministry did not have domain expertise, but said that a specialist was always invited to the meeting. I found the answer to be revealing in two respects. It threw into relief two avoidable inefficiencies of bureaucratic governance—the disjunct between captioned intent and actual practice, and the skew in leadership on technical matters towards generalists over specialists.

The Budget has evoked varying responses. Supporters have dug deep to locate nuggets that bear positively on growth, inflation, fiscal prudence and jobs. Critics have belaboured the absence of grandstanding reforms and the reversal of regressive policies like retroactive taxes. Both can bring logic and substance to their argument. Both make valid points. Both miss a central reality. The finance minister had 45 days to prepare the Budget. He could do little more than signify a directional shift. Further, the Budget is not the only forum for pronouncing on reforms. It can be done at any time and through any medium. It would not surprise me, for instance, if the Prime Minister made a major statement on reforms from the ramparts of Red Fort on August 15. The point is that the Budget was presented so early in the government’s tenure that it is wrong to use it as the touchstone to judge its commitment to reforms or for that matter, its arithmetic for evaluating the macroeconomics. What is not wrong is

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