The Indian government has launched a new Environmental (Protection) Fund which centralises the collection of penalties and compensation under India’s primary pollution laws. The Rules of the new fund were notified by the Ministry of Environment, Forests, and Climate Change on January 15, in consultation with India’s Comptroller and Auditor General.
Under the new rules, levies collected under the Air, Water, and Environment (Protection) Act are to be deposited with the Environmental (Protection) Fund and then redistributed to states by the Fund’s administrator. The Administrator is the Union Environment Ministry “or anybody as notified by the Central Government,” the notification says.
Previously, State Pollution Control Boards both collected and retained levies like environmental compensation and environmental penalty charges, giving a 25% share to the Central Pollution Control Board. The new Fund requires penalties to be deposited directly to the centralised Environmental (Protection) Fund, before remitting 75% to the State’s Consolidated Funds and retaining 25% with the Centre.
“On receipt of the fund from the Administrator, the respective Department dealing with environment issues of each State or Union territory shall credit the amount in a reserve fund under the Public Accounts of the State,” the new rules say.
These funds can be utilised for 11 specific activities, including the installation and maintenance of environmental monitoring equipment, research relating to clean technologies, awareness building, and capacity building for pollution control boards, urban local bodies, and the State Environment Impact Assessment Authority, among others.
The rules also allow limited payments towards administrative expenses, like payment of salaries for contractual staff, but not exceeding 5%. It explicitly prohibits expenditure towards medical expenses, taking foreign trips, construction work, and buying office equipment.
Previous reports have suggested a gross underutilisation of funds from environmental levies by the State and Central Pollution Control Boards. In 2024, the CPCB told the National Green Tribunal that 80% of funds collected through environmental compensation and other levies had remained unspent. Guidelines issued in 2019 had outlined how States and Central Pollution Control Bodies should spend these funds. Many of the same activities find mention in the new rules.
Under the new rules, the Environmental (Protection) Fund will be monitored by the Comptroller Auditor and General of India, with reports laid down in Parliament or State legislatures.
Banner image: Weeds being removed from Doddajala lake on the outskirts of Bengaluru, Karnataka. (AP Photo/Aijaz Rahi)