Context

India needs to spend an estimated 85.6 trillion rupees ($1.05 trillion) by 2030 to adapt its various industries to be compliant with climate change norms, a report by the Reserve Bank of India.

The Report

• Title: Reserve Bank of India’s (RBI) Report on Currency and Finance
• Report theme: Towards a Greener Cleaner India
• The report is written by contributors from the Department of Economic and Policy Research.

Key-highlights of the Report

• India’s goal of achieving the net zero target by 2070 would require-
  • an accelerated reduction in the energy intensity of GDP by about 5% annually
  • a significant improvement in its energy-mix in favour of renewables to about 80% by 2070-71
• Financing requirement: The green financing requirements in India could be at least 5% of GDP annually to address the infrastructure gap caused by climate events.
• Vulnerability of financial institutions: Results of a climate stress-test reveal that public sector banks (PSBs) may be more vulnerable than private sector banks. Globally, however, measurement of climate-related financial risks remains a work in progress.
• Requirement of sector-centric approach: Different sectors of the economy have different emission intensities, it is advisable to not have a uniform climate mitigation strategy across sectors.
• Without any policy action, India’s carbon dioxide emission levels may rise to 3.9 gigatonnes by 2030, from 2.7 gigatonnes in 2021.

India’s Climate Finance Strategy

• Long-Term Low Emission Development Strategy(LT-LEDS): In November 2022, at COP27, India submitted its Long-Term Low Emission Development Strategy (LT-LEDS) to the United Nations Framework Convention on Climate Change.
  • Issue: This requires trillions of dollars of investment. Yet India currently lacks a comprehensive climate finance strategy for mobilizing the capital required to execute on the LT-LEDS. 
• Green Bonds: India’s maiden issue of green bonds, within the broader green bonds frameworkoutlined by the government is commendable.
  • Issue: India may issue $3 billion of green bondsin financial year 2023–2024, but still this will amount to only 1.6 percent of its overall annual borrowing.