Union Budget 2026 Lays Foundation for Growth-Aligned Climate Action, Energy Security, and Resilient Development: TERI Leadership
02 February 2026, New Delhi: Union Finance Minister Ms Nirmala Sitharaman today presented her ninth consecutive Union Budget in Parliament, outlining the Government of India’s fiscal and policy priorities amid a challenging global economic environment. The Union Budget 2026–27 signals a clear shift from intent to execution, anchored in fiscal discipline, sustained economic growth, and people-centric development. With a strong thrust on public investment, domestic manufacturing, energy security, and services-led growth—alongside the strategic deployment of cutting-edge technologies, including artificial intelligence—the Budget advances the vision of Viksit Bharat while seeking to enhance productivity, governance efficiency, and long-term resilience.
The Energy and Resources Institute (TERI), through its senior leadership views the Budget as a critical instrument to advance India’s long-term development goals while strengthening climate action, energy security, resource efficiency, and inclusive growth.
TERI’s experts note that the Budget signals continuity in India’s commitment to sustainability-led growth, with emphasis on infrastructure, manufacturing, energy transition, innovation, agriculture resilience, water security, urban development, and strategic technologies. The extent to which these allocations translate into outcomes, however, will depend on effective implementation, institutional coordination, and adequate environmental safeguards.
Leadership Perspectives
Dr Vibha Dhawan, Director General, TERI, said: “The Union Budget 2026 consolidates India’s long-term transition towards clean, secure, and innovation-driven growth. The continued emphasis on green energy—particularly renewed attention to nuclear power alongside solar and battery energy storage—highlights the importance of diversifying India’s energy mix with reliable baseload capacity, especially for hard-to-abate sectors. Equally significant is the Budget’s push to mainstream artificial intelligence (AI) across sectors, from manufacturing to public services, with a clear focus on AI-led productivity gains, efficiency, and digital transparency.
In agriculture, where inefficiencies in water use, fertilizer application, and labour continue to constrain outcomes, AI-enabled resource efficiency and precision tools have the potential to be transformative. Together with enhanced support for clean energy, rural energy transition mechanisms, and the expansion of digital infrastructure, the Budget signals a future where distributed renewable systems, data-driven decision-making, and sustainable agriculture reinforce one another. Taken together, these interventions lay a strong foundation for sustainable growth aligned with India’s Viksit Bharat vision by 2047.”
Shri Prakash, Distinguished Fellow, TERI, said: “Budget 2026 places strong emphasis on the infrastructure sector, with a particular focus on transport, logistics, and urban development. A key highlight is the proposal for the East-West dedicated freight corridor between Dankuni and Surat, which is expected to enhance industrial logistics and reduce pressure on existing rail networks. In a measure to boost containerization, the budget has come up with a proposal to launch a scheme for container manufacturing with an outlay of ₹10,000 crore. It also plans for developing high speed rail across six major corridors, reinforcing India’s long term vision for faster and more efficient inter city travel.”
Ajai Malhotra, Distinguished Fellow, TERI, remarked: “The Union Budget 2026 usefully advances India’s long-term energy security and green transition, with its emphasis on renewable energy, grid expansion, energy storage, carbon capture, utilisation and storage (CCUS), and critical minerals, including rare earth corridors. The ₹20,000 crores allocation for CCUS is a welcome signal of intent to further decarbonise hard-to-abate sectors, with our Net-Zero 2070 aim in mind. Biodiversity conservation and ecosystem restoration, however, appear relatively underplayed, suggesting that sustainability is perhaps being framed largely through industrial and energy policy lenses rather than a more integrated, environmental stewardship.”
R R Rashmi, Distinguished Fellow, TERI, observed: “This is a budget for investment in long-term growth, innovation, and high tech. The push for rare earths and critical minerals is a big boost for new age technologies that are critical for green growth. MSMEs have received a big boost through a dedicated fund. This will strengthen their ability to meet the demands of low carbon growth and green supply chains.”
Ambassador Manjeev Puri, Distinguished Fellow, TERI, noted: “The ₹20,000 crore commitment to CCUS technology development, over the span of five years is a landmark move for India’s green transition. It is a strategic investment in our net-zero future that merits both our recognition and our proactive support.”
Dr Syamal Kumar Sarkar, Senior Advsior, TERI, highlighted, “The Union Budget 2026 introduces measures to leverage artificial intelligence (AI) for agricultural risk mitigation. This is a significant step toward integrating smart technologies—such as drip and sprinkler systems—with AI-driven soil moisture analytics. While these advancements will curb excessive water consumption and enhance productivity, the initiative is capital-intensive and requires significant improvements in farmers’ data literacy. Consequently, a state-level action plan for water demand-side management is essential.”
Suruchi Bhadwal, Director, TERI, said: “The Budget of 2026 provides a focus on boosting investments in the overall economy while treading carefully over some areas to provide the climate nudge. This includes the focus on the CCUS, continuity in PM Surya Ghar, AMRUT, customs exemptions to support BESS, Nuclear SMRs, which provide the continued focus on transitions and maintaining energy security yet again as a priority. Development of critical and rare-earth mineral corridors, strengthening support for EVs, delineating new rail and transport corridors, promoting inland waterways may also promote mitigation. Focus on resilience has been provided through AI integration, the benefits of which may cut across sectors including agriculture, health; dedicated mention on promoting resilient infrastructure provides opportunities to invest in appropriate technologies that can help strengthen such systems. Overall, it emphasizes on strengthening implementation on various fronts as part of India’s larger growth narrative.”
Anshuman, Director, TERI, observed: “The Union Budget 2026–27 positions water as a strategic enabler of climate resilience, livelihoods, and infrastructure-led growth through integrated, cross-sectoral interventions. The proposed development of 500 reservoirs and Amrit Sarovars can strengthen surface water storage, groundwater recharge, ecosystem services, and livelihoods such as fisheries, provided these are supported by catchment-level planning and sustainable operations.
The Budget’s emphasis on strengthening fisheries value chains highlights the economic importance of healthy coastal and estuarine waters, while the integration of Agri Stack and AI-enabled agricultural systems represents a significant step towards precision irrigation and demand-side water management. The proposal to operationalize 20 new National Waterways introduces navigation as a major competing water use, underscoring the need for basin-level planning, environmental flow safeguards, and sediment management. The continuation of the AMRUT scheme further reinforces commitments to urban water supply, sewerage, and wastewater management. Overall, the Budget advances multi-use, data-driven water management, though stronger emphasis on groundwater governance, water quality regulation, and institutional capacity remains essential.”
Dr Shailly Kedia, Director, TERI, said: “India’s environment spending shows a tale of two realities: pollution control has seen overutilization, and rightly so, rising from ₹853 crore in Budget Estimates in FY 2025-26 to ₹1,300 crore in Revised Estimates, while core ecological programmes such as the Green India Mission and wildlife conservation continue to face underutilization, reflecting the need to build more capacity. The 2026-27 output-outcome framework remains narrowly focused on pollution monitoring, with climate-resilient farming targeting just 30,000 farmers in a country with 118 million cultivators, highlighting the disconnect between climate risk and outcome ambition.
It is time India introduced a dedicated green budgeting exercise, on the lines of gender budgeting, to systematically track environment and climate spending across ministries, link allocations to utilization, and strengthen outcome-based accountability.”
Dr Ritu Mathur, Director, TERI, shared: The Budget is action-oriented and holds promise for converting potential to implementable and inclusive action. With a focus towards revival of legacy industrial clusters, launch of India’s semiconductor mission, Biopharma SHAKTI initiative, and setting up dedicated rare earths corridors, the budget is expected to boost India’s domestic manufacturing and strengthen supply chains.
While the focus on energy security & green transition remains strong with continued support towards renewables and storage, the proposed allocation for CCUS further strengthens the intent to focus on the hard to abate sectors and help achieve India’s Net Zero target.
Allocating higher public capital expenditure and setting up Infrastructure Risk Guarantee Fund to strengthen Infrastructure development while establishing City Economic Regions and strengthening infrastructure via High Speed Rail corridors, dedicated freight corridors and focusing on coastal Infrastructure development are crucial elements towards a robust and Viksit Bharat.”
Alekhya Datta, Director, TERI, highlighted: “The Union Budget 2026–27 represents a decisive maturation of India’s energy transition strategy, shifting the centre of gravity from renewable energy deployment alone to clean-tech manufacturing, industrial resilience, and deep decarbonisation of the real economy. Rather than relying on narrow sectoral subsidies, the Budget embeds clean energy priorities across capital expenditure, strategic manufacturing missions, critical mineral security, industrial logistics, digital infrastructure, and emerging decarbonization technologies such as CCUS and nuclear energy.
For clean-tech and strategic energy manufacturing, the Budget sends three unambiguous signals: 1) Manufacturing depth matters more than capacity announcements; 2) Energy transition will be technology-plural, not technology-exclusive; and 3) Public finance will increasingly de-risk, not permanently subsidize.
Arupendra Nath Mullick, Associate Director, TERI, said: “Sustainability initiatives and ESG-aligned strategies for the Indian manufacturing industries shall take centre-stage. Opportunities for the renewable energy and clean technology sectors to forge public private partnerships shall boost pragmatic pathways for India’s decarbonization journey. TERI’s engagements with the industries serve as lighthouse for such discourse in the near-term.”
Dr Manish Kumar Shrivastava, Associate Director, TERI, noted: “While the budget focuses on protecting the Indian economy from global volatility and emphasizes industrial clusters, it proposes greater integration with the global economy to facilitate the green energy transition. The proposed procedural ease, along with access to tax benefits for relatively larger small and medium enterprises (SMEs), will reduce transaction costs and help protect and enhance their economic viability and competitiveness. While the aggregate impact of these ecosystem nudges requires further analysis, the budget is better served by consolidating the long-term green transition rather than immediate headline announcements.”
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