The cumulative total expenditure for adapting to climate change in India is estimated to reach ₹85.6 lakh crore (at 2011-12 prices) by 2030, the Reserve Bank of India’s (RBI) Department of Economic and Policy Research (DEPR) estimated in its Report on Currency & Finance 2022-23.
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 and a significant improvement in its energy-mix in favour of renewables to about 80% by 2070-71, the DEPR said in its report themed ‘Towards a Greener Cleaner India’.
India’s green financing requirement is estimated to be at least 2.5% of GDP annually till 2030 to address the infrastructure gap caused by climate events, and the financial system may have to mobilise adequate resources and also reallocate current resources to contribute effectively to the country’s net-zero target., it added.
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.
“A pilot survey of key stakeholders in the financial system in India suggests that notwithstanding rising awareness about climate risks and their potential impact on the financial health of entities, risk mitigation plans are largely at the discussion stage and yet to be widely implemented,” the RBI’s policy researchers added.
“Central banks as financial regulators have several policy instruments at their disposal to influence investment decisions and the allocation of resources and credit to achieve the sustainability targets,” the DEPR noted.
Central banks could mandate banks and other financial institutions to consider climate and environmental risks through various regulations, it added.
A balanced policy intervention with progress ensured across all policy levers would enable India to achieve its green transition targets by 2030, making the net zero goal by 2070 attainable, it further said. The findings and views in the report did not represent the views of the RBI, the central bank clarified.
