Economic Survey 2016: Use public finance to achieve climate change goals

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New Delhi | February 27, 2016 12:48 AM

The Economic Survey tabled in Parliament on Friday said that India should use public finance, both international and domestic...

The Economic Survey tabled in Parliament on Friday said that India should use public finance, both international and domestic, for achieving its climate change goals, as the latter on its own would be hard to come by for a developing country like India. It added that green bonds are perceived as new and are attached with higher risk as their tenure is also shorter.

At the Paris climate conference last year, India announced its Intended Nationally Determined Contributions (INDC), which means it would reduce the emissions intensity of its GDP by 33-35% by 2030, compared with the 2005 levels. Moreover, India committed to achieving 40% cumulative electric installed capacity from non-fossil fuel-based energy resources by 2030. “Preliminary estimates suggest that at least $2.5 trillion at 2014-15 prices will be required for meeting India’s climate change action under the INDC between now and 2030,” the Survey said.

The Survey noted that India was experimenting with a careful mix of market mechanisms to raise funds for meeting its green goals. However, international finance remains a critical enabler for the scaled up climate action plans, it added.

Besides the target set by the government for capacity addition on the green energy front, the Survey said developing smart cities, providing infrastructure — which is considered as a green activity — and the sanitation drive under the ‘Clean India’ campaign are all activities needing green finance.

The Survey, however, highlighted the pitfalls of trying to divert funds from welfare schemes into green projects. “For a country like India, poverty alleviation and development are of vital importance and resources should not be diverted from meeting these development needs,” the survey said.

Moreover, it suggested that India, which consumes 60% of its energy based on coal, should lay emphasis on greening coal technology rather than exhausting all the fund in renewable projects.

Green strategy
* The Survey said India should use public finance, both international and domestic, to leverage private finance to achieve its climate change goals, as the latter on its own would be hard to come by for a developing country
* It noted that India was experimenting with a careful mix of market mechanisms to raise funds to meet its green goals

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