Money for Climate : Engine For India’s Growth Post-Covid
The recently held Leaders’ Climate Summit and the Quad leaders meet has reclaimed the USA’s lost position in the climate change helm and galvanized efforts by the world’s major economies to reduce emissions, to mobilize public and private sector finance to drive the net-zero transition and to help vulnerable countries cope with climate impacts. The Quad coalition also proclaimed a new chapter in the Indo-Pacific competition and promised to collaborate in climate initiatives in the region.
This has proved to be a game-changer in the global climate steps ahead of the United Nations Climate Change Conference, this November and has put India, in specific, on the centre stage of the global climate discourse. The current change in the geo-political scenario can reap golden eggs for the Indian economy, which has manifested itself as the kernel of green project potentials for investors. This is evident from the fact that in the recent visit to India, John Kerry, the US climate czar, emphasised the importance of India as a “red hot investment”.
Although India has not pledged a “net-zero” carbon emission as China has, it has made 3 quantitative commitments under the Paris Agreement. However, to substantiate the green transformation, India will require ~ USD 170bn/year for climate action from 2015-30, of which only an average of $ 19bn was financed between 2017-19, out of which $17bn was lost due to greenwashing of funds in other activities to climate. With the ongoing covid-19 pandemic, the climate goals have been impeded with expenditure cuts and funds channelling towards high-priority sectors like healthcare and public welfare.
To rub along the situation and fill this gap in India, four dynamic shifts are necessary: Scale, balance, risk, and regulation in the green finance space. India needs ground-breaking reforms to leverage international finance in the green sectors, which accounts for only 10% of the total investments in the sector. The world’s largest sovereign wealth funds, pension funds and institutional investors like AXA Group, GPIF, Enel, Macquarie Group must not back off from investing in India, considering it a risky venture. Besides this, it is the best time for the Indian diaspora to emerge as a catalyst and collaborator in mobilising the funds and employing their expertise towards green finance. This will also enable recognized channels of funds and swift allocation of funds.
Until recently, environmental protection and economic growth were viewed as irreconcilable goals by developing nations like India, which added burdens on the fiscal health of the country with no real economic value. However, with the advent of technological advances in India and the global Environment, Social & Government (ESG) vogue, green initiates are seen as a virtuous post-covid recovery catalyser by India.
India’s new green job creation can be a game-changer for the economy, especially for the rural community with the majority of the jobs being available for unskilled and semi-skilled workers. People who are considered ineligible for several permanent and well-paid jobs can get maintenance and operations, installation, and sales jobs in this sector. Investments in climate-resilient infrastructure can also support remote populations and smallholder farmers adversely impacted by shocks such as the pandemic through increased market access, improved crop productivity, and greater food security. Investments in low-carbon energy access will also induce sustainable forestry practices which can generate economic returns & employment and improve the health of COVID-19-affected indigenous communities.
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