Kerala and Maharashtra State Budgets Focus on Renewable Energy Expansion

Kerala allocates ₹500 million for electrification of diesel buses, Maharashtra allocates ₹2.53 billion for the environment department


In the recent state budget announcements, Kerala and Maharashtra took the lead to allocate finances to encourage renewable energy and electric vehicle (EV) advancements in the state.

While the budget covered various state development aspects, the renewable energy-related announcements have followed the trend the recent union budget has set to promote the advancement of the non-conventional energy source at state levels.


Kerala has been lacking in overall solar installations, with just 342.3 MW of cumulative solar capacity as of December 31, 2021. With the recent budget announcements, followed by the announcement that Kerala aims to become a carbon-neutral state by 2050, the government is making clear of its intentions towards renewable development.

Kerala Finance Minister K.N. Balagopal announced that as part of eco-friendly transport initiatives, an amount of ₹500 million (~$6.54 million) would be provided for the conversion of highspeed diesel, CNG, and LNG buses into electric buses.

A viability gap fund (VGF) of ₹320 million (~$4.19 million) will be launched to strengthen household non-conventional green energy production, including solar energy. VGF is a grant provided to support infrastructure projects that are economically justified but fall short of financial viability.

A total of ₹330 million (~$4.32 million) is earmarked for the Kerala Institute of Local Administration (KILA) to complete projects, including survey works related to decentralization, which started in 2020-21. The ministry said KILA would be transformed into an environment-friendly solar campus.

An amount of ₹240 million (~$3.14 million) is set apart for the State Water Transport Department to expand the ferry 82 system and purchase passenger-cum-tourist vessels, solar vessels, and new passenger vessels with adequate safety standards. Also, 50% of ferry boats will be converted to run on solar power in the next five years.

An interest subsidy will be given to loans availed by consumers for installing residential rooftop solar in Kerala. An amount of ₹150 million (~$1.96 million) is earmarked for giving interest subsidy for a total loan amount of ₹5 billion (~$65.54 million).

The minister announced that a 25 kW capacity hydrokinetic turbine project would be installed in Moolathara left bank canal under the Chittoor Irrigation Project, a joint venture initiative of the Kerala State Electricity Board (KSEBL) and Electricity Management Center (EMC). The capacity of this will be enhanced to 3 MW in the future. For the activities including this, an allocation of ₹ 91.4 million (~$1.19 million) is set apart for EMC.

The ‘Green Campus’ program, with funding of ₹50 million (~$655,465), aims to establish and maintain rooftop solar systems in all the colleges and other institutions to meet the energy needs, waste management, and promotion of horticulture and floriculture in vacant spaces to promote greenery.

Kerala intends to implement 3 MW demonstration projects in pilot mode, exploring the scope of utilizing new or non-utilized energy resources. Through sponsorships, this program will be implemented as a joint venture by KSEBL, EMC, and developers, supported by a funding of ₹45 million (~589,918).

The state government highlighted its intention to replicate the model used in the Perinjanam Grama panchayat in Thrissur District. With the help of a cooperative bank of that locality, along with Solar Energy Cooperation of India (SECI), and KSEBL, Perinjanam became the first Grama Panchayat in India to install solar panels in houses.

Street vendors in the state will be provided solar pushcarts with batteries and other equipment for lighting and operational facility of electrical gadgets. The solar capacity of each pushcart will range from 500W to 600W. The minister claimed demonstration projects of 100 such vehicles would be achieved.

The minister announced that a 1 kW solar wind hybrid power system would be set up on a pilot basis in fishing boats engaged in deep water fishing as backup power and save fuel. The project will be extended based on the successful demonstration and evaluation.

A green mobility technology hub will be established for developing electric automobile components in association with the Kerala Development and Innovation Strategy Council, KEL Electrical Machines Limited, Kerala State Electronics Development Corporation Limited, Kerala Electrical and Allied Engineering, Autokast, and Kerala Automobiles Limited.

The green tax imposed on vehicles above 15 years increases by 50%. In addition, the green tax will also be levied on the diesel-run three-wheelers, private motor vehicles, medium motor vehicles, heavy motor vehicles, and other diesel vehicles. The additional revenue from this is expected to be to the tune of about ₹100 million (~$1.30 million).

In its budget for 2021-2022, Kerala had announced a 50% reduction for five years in motor vehicle tax for electric, fuel cell, and complete hybrid battery electric vehicles.


Maharashtra has, over time, seen a lot of tender activities for installations of solar power projects. The state currently has a cumulative solar capacity of 2,987 MW as of December 31, 2021. With the new budget allocations, the state government intends to expand its renewable capacity to meet its energy needs.

Maharashtra Finance Minister Ajit Pawar announced an outlay proposal of ₹2.53 billion (~$33.12 million) for program expenditure for the Environment and Climate Change Department.

The minister also announced that 577 MW of solar power projects would be set up at Mauje Kodgaon, Mauje Shindala, Mauje Sakri, Washim, Mauje Kachrala, and Yavatmal. Apart from this 2.5 GW capacity solar energy park will be developed in the state.

The minister also announced that a Solar Energy Fencing Program would be implemented in all sensitive villages to avoid the loss of crops by wild animals.

The minister touched upon the Government’s Draft EV Policy, 2021. The policy aims to support sustainable and clean mobility solutions in Maharashtra. The recommended policy will be valid until March 31, 2025, from the day of its public notification, following which it will be reviewed and extended.

The primary objective of the draft policy is to accelerate the adoption of EVs in the state to contribute to 10% of new vehicle registrations by 2025. The policy has various incentives such as demand incentives, scrappage incentives, buyback incentives, battery warranty incentives, charging infrastructure incentives, supply-side incentives.