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Can India become competitive while pursuing climate resilient development? Difficult but possible

The recently released report of the Intergovernmental Panel on Climate Change (IPCC) in February, 2022 has made it clear that the future lies in climate resilient development, or nothing. Following on the heels of COP26 it has suggested serious and urgent attention to adaptation of climate risk management and mitigation policies, so that the goal of 1.5 degree temperature is met. One might think this means substantial investment in renewable energy, clean technology, infrastructure, and linked sectors, perhaps at the expense of others, and sacrificing competitiveness.

Given the abundance of traditional energy sources like coal, and their dependence on linked industries, some of our states like UP, MP and Odisha may not be naturally competitive in these areas. They may lose out in this race of attracting investment. This may exacerbate inequalities, unemployment and poverty, while simultaneously compromising their revenue generating capacity and competitiveness. Moreover, employment generation due to this shift might also be concentrated in the more developed states of India, resulting in regional disparities and also livelihood losses. Thus, the question is, can competitiveness and our jobs agenda and climate resilient investment go hand in hand?

The IPCC report also cautions about risks of mal-adaptations in design and implementation of policies. This can have adverse consequences for the society, particularly for the vulnerable groups. It suggests some enabling conditions to ensure optimal design and implementation of such policies. In a recently released White Paper on Improving India’s Competitiveness for Inclusive Economic Growth, jointly curated by CUTS International, Institute for Competitiveness and Institute for Studies in Industrial Development, we review the enabling conditions for improving and sustaining India’s competitiveness and found substantial similarity with the conditions mentioned in the IPCC report. These are:

Investment in intangible assets: Competitiveness for inclusive growth is underlined by strengthening of social and economic infrastructures in education and health. The IPCC report also highlights that the feasibility and effectiveness of climate mitigation policies is dependent not just on physical infrastructure development but also on social infrastructure. This would enhance the adaptive capacity of the vulnerable groups through their livelihood diversification and employment, as well as access to basic services and infrastructure. Thus, investment in health and education will be critical for building competitiveness and human capital, as well as climate resilient development.

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