Budget 2026's Green Test: Is India Funding Climate Action Or Just Talking About It?

As winter arrived in north India in late 2025, air quality worsened across several cities. Delhi saw repeated days of “very poor” and “severe” air pollution, with the Air Quality Index (AQI) crossing 300 on many occasions. In some neighbourhoods, including Jahangirpuri, pollution levels rose even higher during peak winter episodes. Other cities in the National Capital Region; Noida, Greater Noida and Ghaziabad, recorded similar levels. Noida experienced several “very poor” and “severe” air days in January 2026, worse than the previous winter. 

These conditions are not just seasonal problems. They point to long-standing failures in pollution control and environmental governance. While air pollution and climate change are distinct challenges, one should not forget how they are also related. Climate change is increasingly worsening pollution episodes by altering weather patterns, increasing heat stress, and intensifying stagnation events that trap pollutants close to the ground. Air pollution remains one of the most visible and harmful environment-related problems in India, with direct effects on health, daily life and work. 

This makes the Union Budget a litmus test of how seriously the government treats environment and climate issues. Yet today, when the Finance Minister Nirmala Sitharaman presented the Union Budget for 2026–27 in Parliament, the speech made no direct mention of the Ministry of Environment, Forests and Climate Change (MoEFCC). While the speech referred to energy transition, clean technology and green finance, it did not frame climate change as an environmental, public-health or governance challenge. Forest protection, biodiversity, air pollution and climate adaptation were not identified as policy priorities.

A close reading of the budget speech confirms this gap. The speech focuses heavily on economic growth, infrastructure, manufacturing, energy security and technology. It does not refer to the environment ministry or explain how environmental protection fits into the government’s spending plans. This absence suggests that environment and climate are still seen as technical matters, not as central political or economic concerns. 

What Climate Action Tracker Says 

The Climate Action Tracker (CAT) is an independent group that evaluates countries’ climate policies against the goals of the Paris Agreement, which aims to limit global warming to well below 2°C and preferably to 1.5°C. 

According to the latest CAT assessment (September 2025), India’s overall climate targets and policies are rated ‘Highly insufficient’ against the Paris Agreement’s 1.5°C goal, and its current policies and actions are rated ‘Insufficient’, showing that implementation still falls short of what is needed.”

CAT finds that under existing policies, India’s greenhouse gas emissions are expected to continue rising beyond 2030 rather than peaking and declining. The assessment also notes that while renewable energy capacity has expanded, India still depends heavily on fossil fuels, especially coal. 

However, this progress has not translated into an absolute decline in emissions. Continued expansion of coal-based power, the absence of a time-bound coal phase-down plan, and rising energy demand mean that renewable growth alone is insufficient to align India with the Paris Agreement’s goal. 

India has announced a target of reaching net-zero emissions by 2070, but CAT says the target lacks detail. There is little clarity on how different sectors will cut emissions, what milestones will be followed, or how the target will be enforced. 

Overall, the findings show that while India has made climate promises, its current policies are not enough to align with a pathway that limits warming to 1.5°C.  

What the Budget Talks About — and What It Doesn’t 

In the budget speech, Finance Minister Sitharaman spoke at length about energy transition, clean technology, investment in renewables, green finance and research. These ideas frame climate-related action mainly as part of economic growth and future industries. 

The Budget also announced a ₹20,000 crore plan for carbon capture, utilisation and storage (CCUS) technologies, aimed at reducing emissions from heavy industries over a five-year period. This marks a push towards climate-related industrial technologies and does feature in the budget speech. However, CCUS funding is focused on technological and industrial decarbonisation, rather than on environmental protection, climate adaptation, or pollution control.”

What is missing is any discussion of climate action as an environmental or governance issue. The speech does not mention funding for climate adaptation, forest conservation, biodiversity protection or pollution control. Air quality, despite affecting millions each winter, is not addressed as a policy concern.  This shows a narrow approach to climate issues. 

Renewable energy and green hydrogen are presented as growth opportunities, but there is no explanation of how environmental damage will be reduced or how communities will be protected from climate risks.   

What the Budget Documents Show 

The detailed budget documents tell a slightly different story. The Demands for Grants for 2026–27 show that the Ministry of Environment, Forests and Climate Change receives a gross allocation of ₹4,413.36 crore (revenue ₹4,190.56 crore + capital ₹222.80 crore), with a net figure of ₹3,759.46 crore after recoveries and receipts. This represents a roughly 10% increase over the revised estimates for 2025–26 (₹4,017.31 crore gross). Key areas include Control of Pollution at ₹1,091 crore and the National Mission for a Green India at ₹170 crore (plus ₹2.50 crore for a new National Afforestation component), supporting forestry, wildlife, and environmental efforts.   

However, this funding appears only in technical budget tables. It is not highlighted or explained in the budget speech. There is no discussion of what the money is meant to achieve or how it links to climate risks, public health or environmental protection. India also does not publish a single, clear climate budget. 

Climate-related spending is spread across many ministries, such as power, transport, science, agriculture and water. Because of this, it is difficult to know how much money is actually being spent on climate action, adaptation or pollution control.  

Why This Matters 

The winter pollution crisis shows why this silence is important. Very high AQI levels are not only short-term failures; they reflect long-term neglect of environmental planning. Climate change worsens these problems by increasing heat, changing weather patterns and making extreme events more frequent. 

India also faces growing risks from heatwaves, floods, water shortages and climate-related health problems. Addressing these challenges requires clear planning and steady funding. These issues, however, do not appear as priorities in the budget speech.  

The Union Budget for 2026–27 includes repeated references to clean energy and technology, but does not directly address environment, forests or climate adaptation. The Ministry of Environment, Forests and Climate Change is absent from the speech. 

The worsening air quality seen across north India this winter underlines the real-world costs of weak environmental action. The budget raises a basic question: Is climate action being funded to solve real environmental problems, or mainly to support green business and investment?