India
World's biggest democracy on path to decarbonise
India is an icon of the promises and pitfalls of the “traditional” model of economic development: heavy industry, mining, exports of manufactures and minerals, all powered by fossil fuels, lax regulation and cheap labour. This brown economy approach has delivered double digit annual growth rates, a quintupling of GDP per capita, and lifted hundreds of millions out of poverty.
But it has come at a heavy cost. India now emits more carbon than every country in the world save China and the US. Toxic air claims 1.24 million lives every year, one eighth of the country’s total deaths.1 62 billion litres of untreated sewage flow into India’s rivers every day – rivers that millions rely on for drinking water, washing and crop irrigation.2 And soil pollution and erosion threatens food supplies, flood plains and wildlife populations.
Adding to these looming environmental crises is a social one: skyrocketing inequality. The vast majority of India’s new wealth has been cornered by a tiny subset of India’s 1.3 billion people: 73% of the wealth generated in 2017 went to the richest 1% of people, but the poorest half of the population – equivalent to every man, woman and child in Europe – saw their wealth rise just one percent.3
So far at least, the Indian policy response to COVID-19 threatens to further entrench this inequality. Although some of India's giant stimulus spending (worth 7% of total GDP) is targeting nature-positive employment through new jobs in forest management for informal and rural workers, most of the spending lacks specific social conditionality, and implies significant environmental damage. Some green regulations have been suspended, and incentives for EVs and renewables are contrasted with subsidies for coal investment.
The sheer size of India means that domestic policy decisions – especially on climate, carbon and the environment – will have global consequences. And the country does have some genuinely world-leading legislation on climate, renewable energy and poverty reduction. Valuing nature is mixed picture, with ground-breaking early work on national wealth accounting not yet matched by policies to protect the value of nature identified.
What is particularly worrying in India’s case is that economic inequality is being added to a society that is already fractured along the lines of caste, religion, region and gender.
India’s growing green finance sector has also driven policy innovation, including a tax on coal that directly finances clean energy, priority central bank lending to key green sectors, and a world-first energy efficiency credits trading programme.
Renewable energy the area of most impressive ambition. India was the first country in the world to establish a dedicated ministry for renewable energy, in 1982. A target of 20 GW of solar capacity by 2022 – decried as wildly optimistic when it was set in 2010 – was passed four years ahead of schedule. India is now targeting 227 GW of renewables by 2022, more than the total installed renewable capacity of Latin America.
However, coal remains a sooty black spot on India’s green credentials. Expanding coal power remains central to the Indian government’s development strategy, and as the world’s fourth largest importer, Indian demand helps prop up much of the world’s declining coal industry. But as India’s surge of cheap renewable power squeezes coal’s wafer-thin profit margins, the next few years will be critical in determining the future not only of India, but the rest of the world as well.
Policy Scores
Last updated 23 Oct 2022
Green COVID-19 Recovery
India is still grappling with the immediate impacts of the pandemic, which have brought significant social and economic challenges. Over the past year, the Modi Administration deployed a series of substantial stimulus packages with the fiscal cost totalling in excess of USD$228 billion or 8.4% of GDP according to the IMF. Funds have largely been directed towards support for healthcare, welfare and businesses, alongside targeted support for the agricultural sector - with the overall aim of making India atma nirbhar (self-reliant).
So far, the Indian government has directed a relatively small proportion of stimulus towards supporting renewable energy and clean transport. Green measures include USD$3.5 billion in production-linked incentives for batteries and solar PV, reinforced by the provision of loans to farmers to implement solar technologies and regulatory changes such as waving charges for interstate transmission of wind and solar power until December 2022, and setting minimum thresholds for solar production in the utility sector. In the 2021 Union budget, approximately USD$12 billion has been set aside for metro railway development. Meanwhile, a MoU was recently signed for US$26.5 billion for 5,000 new biogas plants to boost the availability of cleaner fuels for transport (though the scheme was first announced back in 2018 so not included in our scoring assessment). A notable bright spot from the perspective of supporting an eco-inclusive recovery, is the additional USD$780 million of funding allocated to a nature-positive afforestation and job creation programme benefiting rural communities. However, green measures are undermined by ongoing approval of environmentally harmful projects (such as expansion of mining into Protected Areas) and the rollback of environmental monitoring requirements in response to the pandemic. More broadly, the government remains hostage to coal, ploughing fresh investment into new coal-fired generation capacity and infrastructure, providing loans to thermal power producers, offering rebates on coal extraction, and further deregulating the industry counteracting the clean energy transition.
Overall, Indias stimulus is a mixed bag. In aiming to bolster domestic industry, funds have largely fallen to existing environmentally-harmful industries and energy types. Green measures introduced as part of general economic packages suggest a narrow and shallow engagement with green recovery from COVID-19 to date (relatively limited budgets with funds predominantly centred on climate mitigation and the manufacture of green products) - exemplified by the lack of any wider narrative on an inclusive green economy. India is pushing the green recovery envelope amongst lower income peers, but has more to do to demonstrate leadership amongst larger and middle income economies.
India is still grappling with the immediate impacts of the pandemic, which have brought significant social and economic challenges. Over the past year, the Modi Administration deployed a series of substantial stimulus packages with the fiscal cost totalling in excess of USD$228 billion or 8.4% of GDP according to the IMF. Funds have largely been directed towards support for healthcare, welfare and businesses, alongside targeted support for the agricultural sector - with the overall aim of making India atma nirbhar (self-reliant).
So far, the Indian government has directed a relatively small proportion of stimulus towards supporting renewable energy and clean transport. Green measures include USD$3.5 billion in production-linked incentives for batteries and solar PV, reinforced by the provision of loans to farmers to implement solar technologies and regulatory changes such as waving charges for interstate transmission of wind and solar power until December 2022, and setting minimum thresholds for solar production in the utility sector. In the 2021 Union budget, approximately USD$12 billion has been set aside for metro railway development. Meanwhile, a MoU was recently signed for US$26.5 billion for 5,000 new biogas plants to boost the availability of cleaner fuels for transport (though the scheme was first announced back in 2018 so not included in our scoring assessment). A notable bright spot from the perspective of supporting an eco-inclusive recovery, is the additional USD$780 million of funding allocated to a nature-positive afforestation and job creation programme benefiting rural communities. However, green measures are undermined by ongoing approval of environmentally harmful projects (such as expansion of mining into Protected Areas) and the rollback of environmental monitoring requirements in response to the pandemic. More broadly, the government remains hostage to coal, ploughing fresh investment into new coal-fired generation capacity and infrastructure, providing loans to thermal power producers, offering rebates on coal extraction, and further deregulating the industry counteracting the clean energy transition.
Overall, Indias stimulus is a mixed bag. In aiming to bolster domestic industry, funds have largely fallen to existing environmentally-harmful industries and energy types. Green measures introduced as part of general economic packages suggest a narrow and shallow engagement with green recovery from COVID-19 to date (relatively limited budgets with funds predominantly centred on climate mitigation and the manufacture of green products) - exemplified by the lack of any wider narrative on an inclusive green economy. India is pushing the green recovery envelope amongst lower income peers, but has more to do to demonstrate leadership amongst larger and middle income economies.
Governance
National green economy plan
The Three Year Action Agenda (2017-20), together with a mid-term 7-year Strategy and long-term 15-year vision, is Indias macro economic plan. It aspires to sustainable & balanced growth, and recognises the importance of decarbonisation largely through efficiency gains and mass deployment of renewable energy, but envisions continued use of coal and does not set a net-zero goal. Climate Action Tracker identifies Indias climate policy trajectory as being potentially 2C Compatible, assuming targets are met.
The Three Year Action Agenda (2017-20), together with a mid-term 7-year Strategy and long-term 15-year vision, is Indias macro economic plan. It aspires to sustainable & balanced growth, and recognises the importance of decarbonisation largely through efficiency gains and mass deployment of renewable energy, but envisions continued use of coal and does not set a net-zero goal. Climate Action Tracker identifies Indias climate policy trajectory as being potentially 2C Compatible, assuming targets are met.
Inclusive governance
A somewhat hostile environment for NGOs and civil society groups, with bureaucratic restrictions, cancelled licences, and the lack of a clear national or local civil consultation platform hampering engagement, despite policies aimed at encouraging stakeholder participation in the cancelled 12th Five Year Plan. No policies on employee involvement in corporate governance.
A somewhat hostile environment for NGOs and civil society groups, with bureaucratic restrictions, cancelled licences, and the lack of a clear national or local civil consultation platform hampering engagement, despite policies aimed at encouraging stakeholder participation in the cancelled 12th Five Year Plan. No policies on employee involvement in corporate governance.
SDG business strategy
No specific requirements for businesses to report on SDG goals, but the 2013 Companies Act mandates all firms to invest in Corporate Social Responsibility (CSR) initiatives, and the Reserve Bank of India has established sustainable development reporting guidelines for commercial banks.
No specific requirements for businesses to report on SDG goals, but the 2013 Companies Act mandates all firms to invest in Corporate Social Responsibility (CSR) initiatives, and the Reserve Bank of India has established sustainable development reporting guidelines for commercial banks.
Wealth accounting
First country in the world to publish natural wealth accounts, tracking plants, animals, water and other natural capitals since 2010, and the Central Statistics Office has published detailed accounts covering land, water, air and minerals since 2018. Has partnered with UN-SEEA and the CBD for the Natural Capital Accounting and Valuation of Ecosystem Services (NCAVES).
First country in the world to publish natural wealth accounts, tracking plants, animals, water and other natural capitals since 2010, and the Central Statistics Office has published detailed accounts covering land, water, air and minerals since 2018. Has partnered with UN-SEEA and the CBD for the Natural Capital Accounting and Valuation of Ecosystem Services (NCAVES).
Finance
Green finance plan
Clear commitment to sustainable finance, and momentum building in the private sector; the Federation of Indian Chambers of Commerce & Industry (FICCI) has set up a Green Bond Markets Development Council to accelerate green finance, particularly for clean energy. However, specific targets and policy commitments lacking.
Clear commitment to sustainable finance, and momentum building in the private sector; the Federation of Indian Chambers of Commerce & Industry (FICCI) has set up a Green Bond Markets Development Council to accelerate green finance, particularly for clean energy. However, specific targets and policy commitments lacking.
Green fiscal & monetary policy
Starting from a low base, but genuinely innovative green fiscal and monetary policy reforms. Subsidy reform underway for high-carbon sectors (including coal, oil and gas), and a Priority Sector Lending Programme established under the central bank to finance green sectors. Perform, Achieve, Trade (PAT) is an innovative new market mechanism for enhancing energy efficiency in intensive industries though an energy savings certificate trading scheme.
Starting from a low base, but genuinely innovative green fiscal and monetary policy reforms. Subsidy reform underway for high-carbon sectors (including coal, oil and gas), and a Priority Sector Lending Programme established under the central bank to finance green sectors. Perform, Achieve, Trade (PAT) is an innovative new market mechanism for enhancing energy efficiency in intensive industries though an energy savings certificate trading scheme.
Safe & accountable banks
Stress testing is undertaken by Indian central bank, but only financial indicators currently included: interest rates, equity and liquidity risks. No announced plans to include environmental or social risk testing.
Stress testing is undertaken by Indian central bank, but only financial indicators currently included: interest rates, equity and liquidity risks. No announced plans to include environmental or social risk testing.
Pricing carbon
No national carbon pricing or trading schemes in place, despite some private sector interest in implementing a carbon market. A tax on coal one of the main sources of carbon in India has been in place since 2010; current rates are equivalent to around 2 USD per tonne of CO2.
No national carbon pricing or trading schemes in place, despite some private sector interest in implementing a carbon market. A tax on coal one of the main sources of carbon in India has been in place since 2010; current rates are equivalent to around 2 USD per tonne of CO2.
Sectors
Green sectoral policy plan
No overall intersectoral body for green policy at the sectoral level. The 12th Five Year Plan (2012-17) called for the establishment of new inter-ministerial institutions to resolve issues around air quality, waste, water, and forestry sectors, but these have not yet been implemented.
No overall intersectoral body for green policy at the sectoral level. The 12th Five Year Plan (2012-17) called for the establishment of new inter-ministerial institutions to resolve issues around air quality, waste, water, and forestry sectors, but these have not yet been implemented.
Small business support
Support to SMEs is a declared objective of the Three Year Action Agenda, and small businesses are a financing priority for the central bank. However, information is lacking on concrete outcomes.
Support to SMEs is a declared objective of the Three Year Action Agenda, and small businesses are a financing priority for the central bank. However, information is lacking on concrete outcomes.
Carbon budgeting
No carbon budget in place; main decarbonisation goal is to reduce the emissions intensity of its GDP by 35% by 2030 from 2005, although current plans to continue building coal power capacity undermine this.
No carbon budget in place; main decarbonisation goal is to reduce the emissions intensity of its GDP by 35% by 2030 from 2005, although current plans to continue building coal power capacity undermine this.
Clean energy policy
Ambitious targets recently strengthened to 228 GW of renewables by 2022 and 40% clean electricity capacity by 2030; supported by massive public investments in renewables, energy efficiency, and electrification. However, heavily reliant on hydropower and national energy strategy continues to include new subsidised coal.
Ambitious targets recently strengthened to 228 GW of renewables by 2022 and 40% clean electricity capacity by 2030; supported by massive public investments in renewables, energy efficiency, and electrification. However, heavily reliant on hydropower and national energy strategy continues to include new subsidised coal.
People
Green jobs
Social inequalities mentioned as a key action issue under the current Three-Year Action Agenda, especially those relating to sanitation, water access, and economic participation. Skill Council for Green Jobs launched by Ministry for New & Renewable Energy and Confederation of Indian Industry in 2015.
Social inequalities mentioned as a key action issue under the current Three-Year Action Agenda, especially those relating to sanitation, water access, and economic participation. Skill Council for Green Jobs launched by Ministry for New & Renewable Energy and Confederation of Indian Industry in 2015.
Pro-poor policy
Many pro-poor development policies and inclusivity programmes, but relatively little attention given to poverty & environment integration. The Mahatma Gandhi National Rural Employment Guarantee Act of 2006 provides jobs maintaining natural infrastructure, drainage and watersheds for around 50 million rural households, making it the largest works-based social protection scheme in the world.
Many pro-poor development policies and inclusivity programmes, but relatively little attention given to poverty & environment integration. The Mahatma Gandhi National Rural Employment Guarantee Act of 2006 provides jobs maintaining natural infrastructure, drainage and watersheds for around 50 million rural households, making it the largest works-based social protection scheme in the world.
Participatory policymaking
No information found on future public consultation in the Strategic Plan; social and inclusivity evaluation are not included in reporting framework. Although most government social support programmes include specific targets for reaching women & marginalised groups, systematic reporting on targets and impact assessment is still lacking.
No information found on future public consultation in the Strategic Plan; social and inclusivity evaluation are not included in reporting framework. Although most government social support programmes include specific targets for reaching women & marginalised groups, systematic reporting on targets and impact assessment is still lacking.
Innovative social protection
Some innovative pilots in place for new approaches to social support, especially around rural farming communities and marginalised groups, but no overarching strategy. Pilot schemes include coastal area adaptation programs, soil health payments for farmers, and crop insurance. A form of Universal Basic Income has been trialled, called the Direct Benefit Transfer scheme.
Some innovative pilots in place for new approaches to social support, especially around rural farming communities and marginalised groups, but no overarching strategy. Pilot schemes include coastal area adaptation programs, soil health payments for farmers, and crop insurance. A form of Universal Basic Income has been trialled, called the Direct Benefit Transfer scheme.
Nature
Ocean & land conservation
Very robust strategy for SDG14, under the Blue Revolution programme, for reforming fisheries, strengthening marine research, and developing environmentally friendly marine industries. SDG15 lacks a specific plan, and SDGs more broadly are not incorporated into Indias overall economic planning.
Very robust strategy for SDG14, under the Blue Revolution programme, for reforming fisheries, strengthening marine research, and developing environmentally friendly marine industries. SDG15 lacks a specific plan, and SDGs more broadly are not incorporated into Indias overall economic planning.
Natural capital accounts
India is one of five countries to have received support from the EU funded Natural Capital Accounting and Valuation of Ecosystem Services Project (NCAVES) since 2017. The project supported the government in establishing an Inter-Ministerial Group on Environmental Accounting, and the Ministry of Statistics' (MoSPI) work compiling ecosystem accounts aligned to the UN-SEEA framework.
India currently assesses a number of ecosystem services accounts at the national level, and has begun reporting on these annually in the government statistics publication EnviStats India. In addition, it is experimenting with extent and condition accounts for selected ecosystems, and has plans to test a comprehensive set of ecosystem accounts at the sub-national level. Under the NCAVES project, MoSPI have also developed the India-EVL Tool - a database which provides a snapshot of the values of various ecosystem services across the different States.
India is one of five countries to have received support from the EU funded Natural Capital Accounting and Valuation of Ecosystem Services Project (NCAVES) since 2017. The project supported the government in establishing an Inter-Ministerial Group on Environmental Accounting, and the Ministry of Statistics' (MoSPI) work compiling ecosystem accounts aligned to the UN-SEEA framework.
India currently assesses a number of ecosystem services accounts at the national level, and has begun reporting on these annually in the government statistics publication EnviStats India. In addition, it is experimenting with extent and condition accounts for selected ecosystems, and has plans to test a comprehensive set of ecosystem accounts at the sub-national level. Under the NCAVES project, MoSPI have also developed the India-EVL Tool - a database which provides a snapshot of the values of various ecosystem services across the different States.
Natural capital committee
No independent commission in place currently, but work on natural capital methodology and technical procedure is being guided by independent international experts from TEEB and GIZ.
No independent commission in place currently, but work on natural capital methodology and technical procedure is being guided by independent international experts from TEEB and GIZ.
Nature-based fiscal reform
Some environmental fiscal policies already in place, largely managed through taxes. A tax on coal known as the Clean Energy Cess channels revenue from coal consumption into the National Clean Energy Fund. No clear funds set aside for natural capital management and restoration.
Some environmental fiscal policies already in place, largely managed through taxes. A tax on coal known as the Clean Energy Cess channels revenue from coal consumption into the National Clean Energy Fund. No clear funds set aside for natural capital management and restoration.