The climate crisis is urgent. We see its effects daily: smog, floods, and extreme heat, all shared on social media. Yet, our government budgets often overlook these pressing issues. Traditional budgeting frameworks fall short when it comes to handling the multifaceted nature of the climate emergency. This isn’t just an environmental issue; it impacts jobs, health, and agriculture. A budget that acknowledges climate change should integrate strategies for resilience across various sectors.
Currently, climate-related funding is isolated within specific departments, like the Ministry of Environment and the Ministry of Renewable Energy. For instance, only a tiny fraction—0.009% of GDP—was allocated to the Ministry of Environment in 2026. Such minimal investment is woefully inadequate. Conversely, while renewable energy is essential, funding must also prioritize protection against climate impacts. It’s about balance.
Climate change is a risk multiplier. According to the Germanwatch Climate Risk Index, India faced economic losses of around USD 170 billion over the last three decades due to climate-related disasters. Vulnerable communities bear the brunt of these events, suffering both financially and socially. For instance, 430 severe climatic events over three decades have claimed over 80,000 lives and affected more than 1.3 billion people. A truly effective budget would channel resources into health initiatives that address heat-related illnesses and mental health challenges stemming from climate stress.
The Ministry of Health received zero funding for climate-related health strategies in 2025, a critical shortfall given the frequency of disasters. Likewise, the informal workforce—comprising millions—needs protections against extreme weather. Compensation for lost wages during heatwaves, alongside climate-resilient urban infrastructure, is not just welfare; it’s necessary for economic stability.
In agriculture, the recent floods in Punjab showcased how insufficient budget provisions can lead to massive financial losses. Farmers need more robust insurance and support systems. Integrating climate considerations into all ministry budgets is crucial for preventing future losses.
Investing in these areas also strengthens India’s position in global discussions on climate finance. Our country asks for aid to combat climate damage, but we must first show our commitment through strategic domestic budgeting. An effective budget not only prepares us for international funding but also demonstrates serious intention and builds infrastructure to utilize those funds wisely.
On the revenue side, big corporations that pollute need to contribute their fair share through taxation. This aligns with the principle of ‘common but differentiated responsibility.’ We should move beyond simply reducing emissions to also cleaning up existing pollution. Revenue generated from these efforts should support the communities and ecosystems most affected by climate change.
The Reserve Bank of India estimates that India will need around 85.6 lakh crore by 2030 for climate adaptation. This translates to an annual investment of at least 2.5% of GDP to bridge the existing adaptation gap. However, without significant attention and investment from the government, we risk falling short.
Globally, budgeting systems are evolving to incorporate climate needs, using methods like ‘climate tagging’ to identify relevant allocations. As these discussions grow, will our government take notice and respond effectively to the climate crisis? The clock is ticking.
Vishvaja Sambath and Amitanshu Verma are with the Centre for Financial Accountability.
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climate change,climate crisis,Environment,Ministry of Environment and Forestry,Union budget
