Stating that private green finance will not readily be available to India for implementing its climate change plans, the Economic Survey on Friday suggested leveraging public finance, both international and national, to meet the Paris agreement objectives.
Noting that the climate change issue is critical for India though green finance is yet to pick up, the Economic Survey for 2015-16 said: “...for developing countries like India, private finance will not readily be forthcoming and public finance both international and domestic needs to be used to leverage private finance.”
While mobilisation and effective use of green finance is of primary importance, there are some issues which need to be taken note of, it observed.
The survey said that for India, poverty alleviation and development are of vital importance and resources should not be diverted from meeting these development needs.
India's INDC (Intended Nationally Determined Contribution) have been welcomed as fair and ambitious, specifically in the renewable energy and forestry sectors.
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However, the task is enormous and mobilising finance is critical to achieving the ambitious targets set by India, the survey said said.
“Successful implementation of the Paris Agreement and climate change action plans set up in the INDCs require huge financial resources which cannot be met through budgetary sources alone,” the survey observed.
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, it said.
“While the maximum share of the country's current climate finance comes from budgetary sources, India is not relying solely on them and is experimenting with a careful mix of market mechanisms together with fiscal instruments and regulatory interventions,” it said.
However, it needs to be emphasised that global finance is a critical enabler for the scaled up climate action plans, the survey said.
Green finance should not be limited only to investment in renewable energy, as for a country like India, coal-based power accounts for around 60% of installed capacity, it said, adding that emphasis should be on greening coal technology.
In fact, green finance for development and transfer of green technology is important as most green technologies in developed countries are in the private domain and are subject to intellectual property rights (IPR), making them cost prohibitive, it added.
According to the survey, green bonds are perceived as new and attach higher risk and their tenure is also shorter. There is a need to reduce risks to make them investment grade.
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