Analysis of Trends and Patterns of Central Government Expenditure on Environment

Abstract This study examines the trends and patterns of the Indian central government's environmental spending over a 20-year span, from 2000–01 to 2019–20. The analysis assesses the growth, composition, and distribution of environmental spending across key sectors like water supply and sanitation, renewable energy, irrigation, biotechnology, and forest conservation using secondary data from union budget documents and RBI state finance reports. The results show that overall environmental spending has increased significantly, about ninefold during the course of the study, but its share of overall budget spending is still quite small, averaging between one and two percent. The majority of expenditures come from revenue expenditure, which suggests that operational and maintenance tasks are prioritized. Capital expenditures, on the other hand, are negligible and represent little investment in long-term environmental infrastructure. Sector-wise study reveals that water supply and sanitation receive more funding, whereas river development and renewable energy show more growth potential and fluctuation. The analysis comes to the conclusion that, despite a steady growth, government spending on environmental initiatives is still relatively modest when compared to total spending. Nonetheless, there is a positive correlation between overall government expenditures and environmental spending, indicating that fiscal policy is increasingly acknowledging environmental sustainability. Keywords: Trends and Patterns, Central Government Expenditure, Environment 1.Introduction India’s growth post 1991 (Liberalization, Privatization, and Globalization) has been at an increasing rate as compared to earlier. This has propelled the industrial revolution in the country. On the contrary, the growth as lead to more urbanization in the country. The industrialization and urbanization together are causing severe environmental (land, air, water, noise) problems. In this concern, the central government plays a significant role in protecting the environment. According to the KPMC report (2009), The government has four distinct roles in addressing environment sustainability, i.e Policy development, Regulation, Internal sustainability management and facilitation through financing environment. In this concern, the central government plays a significant role in protecting the environment. Every year the government allocates funds through the budget to preserve the environment. These funds are allotted to various environment concerned ministries. These ministries implement various projects and programs which save the environment. The Republic of India is one of the largest countries in South Asia. It is located to the north of the equator between 6° 44′ and 35° 30′ north latitude and 68° 7′ and 97° 25′ east longitude. It is the second populous country with 1/6th of world population, and seventh largest by land area coverage. The country has 1/3rd of the land facing towards the sea while the rest of the borders is shared with six countries namely Pakistan, Nepal, China, Bhutan, Myanmar, and Bangladesh. The country has a large peninsula that is well surrounded by Arabian Sea, Bay of Bengal, and Andaman Sea. The coastal belt is 7,517 kms. It has over 29,73,190sq kms of land followed by 3,14,070 sq. kms of water resources India covers a land area of 3.28 million hectares that is only 2.4 percent of the total land area in the world, yet it is home to about 17 percent of the world population. It has a diverse range of ecological landscapes like mountains, plains, plateaus, coast, islands and deserts. India exhibits immense diversity, not only in terms of climate, but also in terms of ecological regime. It is rightly called the “land of diversity” as it has immense biodiversity wealth. India is also rich with 45000 varieties of flora and 89451fauna (www.faunaofindia.nic.in). Out of 34 global biodiversity hotspots, India hosts 4 i.e., Western Ghats, Eastern Himalaya, Indo Burma region and Sunderland. India covers over 7,12,249 square kms of forest area which is 21.67 percent of its total geographical area and tree cover of 2.89 percent. It is classified as very dense (3.02 per cent), moderately dense (9.26 per cent), and open forest (10 per cent). The country hosts 18 biosphere reserves, 163 community reserves, 101 National Parks, 131 Botanical gardens, 553 wild life sanctuaries, and 42 wet lands (Source: National Wildlife Database of Wildlife Institute of India). India also has rich natural resources like coal, iron ore, limestone, titanium, thorium, mica, bauxite, and manganese (www.wiienvis.nic.in). With the above natural condition, India is not free from environmental issues. The new economic policy of India boosted the economic growth and simultaneously paved the way for the environmental hassle. Today India is facing severe environmental problems like soil, air, water pollution, extinction of biodiversity, loss of forest, variations in climate change, etc. In order to conserve environment and to govern natural resources the government of India appointed Ministry of Environment, Forest and Climate Change (MoEF&CC) as nodal agency which also oversees the implementation of India’s environment, forest policies and programmes relating to conservation of the country’s natural resources, its biodiversity, forests and wildlife and for ensuring the welfare of animals and prevention and abatement of pollution. Along with MoEF&CC, there are other ministries they join hand together in preservation of environment. The brief introductions of those ministries are discussed below. 2.Review of Literature Lindlein Peter (2008) examines the demand for environmental finance and the supply of funds from financial institutions for environmental activities. The study explored the role of donor support in environmental finance. The data is collected from households, micro-enterprises, and small municipalities for the study. The study found that the demand for environmental finance, donor support in environmental finance, and smart subsidies are increasing environmental investments. Financial institutions are removing or reducing barriers to the financing environment and demand for green products. Islam and Lopez (2015) highlighted the importance of the recently coined term public finance towards environmental development. The article revolves around the public spending towards environmental development activities that conserve the earth's natural environment. The article also speaks about rules, regulations, and policies that formulate a part of regulatory measures in controlling the environment. Kaur (2016) aims at examining corporate environmental accountability in India. The study interviewed 50 respondents (corporate companies) that belong to the environmentally sensitive sector (Cement, fertilizer, drugs and pharmaceuticals, refinery, chemicals) across India. The result showed that ENGOs (Environmental Non-Governmental Organizations) faced a lack of active responses from the company side. They also remark that tax relief, top management supports are essential factors for facilitating environment accountability. The results also reveal that corporate respondents consider environmental-related information to be least read in comparison to information related to profits, operational activity, and future outlook. Finally, it suggests that companies should consider the stakeholder (ENGOs) views while taking strategic decisions having implications on the environment. Kaur Dalbir (2016) in his study reported environmental and financial benefits in corporate sectors. The reports showed the importance of environmental finance in the corporate sector. It analyses the role of environmental finance in a clean environment in corporate sectors. It collected information from annual reports of various corporate sectors. Its finding shows increasing participation of the corporate sector and neglects the role of other financial institutions in the financing environment. 3.Objectives 1.To examine the Central government expenditure towards environment 2.To examine the relationship between Central government expenditure and environment expenditure in India 4.Methodology The article aims at examine the Central government expenditure towards environment and the relationship between Central government expenditure and environment expenditure in India over a period of 20 years i.e. from 2000-01 to 2019-20. The secondary data of public expenditure on environment with respect to Central government for twenty years are collected from RBI state finance (Total environment expenditure includes expenses on water supply and sanitation, agriculture and allied sector, irrigation, flood control, science, technology and environment, wildlife conservations and plantation). Collected data are analyzed through using excel. 5.Analysis: The budget expenditure represents the government’s expenditure towards various development activities that are essential. One such activity is the environment. With over 21 per cent of green cover and aim of 33 per cent coverage, India is struggling to enrich its environment which is necessary for tomorrow. The government through various ministries has initiated several programmes to build a sustainable environment. Such an expenditure by the central government towards environment related activities as a percentage of budget expenditure is presented in table 3.1. It explains the government’s spending towards maintaining and building environment infrastructure across the states over the two decades. The Central government spending has increased from Rs. 3,915.68 crores in 2000-01 to Rs. 36,618.73crores in 2019-20 with over nine fold increase at an average of Rs. 16,875.01crores. The environment expenditure has been showing an increasing trend over the study period. Except the year 2011-12, 2013-14 2018-19 and 2019-20 it has been increasing. The