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A new report by Climate Policy Initiative (CPI) highlights the importance of green finance playing a significant role in the overall growth of the economy and how it outpaced the country’s GDP growth rate.
CPI report released
The CPI report, supported by Shakti Sustainable Energy Foundation, titled ‘Landscape of Green Finance in India’ (2016-18), shows that green sectors such as renewable energy, energy efficiency and low-carbon transport are helping drive economic growth in India.
Dinesh Jagdale, Joint Secretary, Ministry of New and Renewable Energy, said: “To meet the targets, full spectrum of renewable energies will have to be deployed. And we need to develop refinancing models by mobilising domestic and foreign sources of private capital. There is a need to look at different instruments that will unlock finance into renewable energy.”
“In order to meet the goal of 450 GW, the full spectrum of renewable energies will need to be deployed in every sector. It is a huge target, but intent is clear and positive,” he said.
The total green finance flows in India for FY17 were ₹111,000 crore ($ 17 billion) and ₹137,000 crore ($21 billion) for FY18. The total tracked green finance for the years 2016-18 amounted to ₹248,000 crore ($38 billion). This compares to an estimated $170 billion per year required for India to finance its climate actions, putting tracked green investments at an estimated 10 per cent of the required investments across sectors.
GDP growth
The green investments outpaced India’s GDP growth during the period of study. The GDP of India grew at an average rate of 7.2 per cent between 2016-17 and 2017-18, and the tracked investments suggest an increase of 24 per cent. This indicates that green investments have the potential for driving economic growth of the country.
Mahua Acharya, Asia Director, Climate Policy Initiative, said: “The report shows the significant potential of renewable energy and other green technologies to fuel India’s economy. It is also encouraging to know that the Government of India’s support to unlock private investment has helped, but we also see much more needs to be done.”
In both years, 2016-2017 and 2017-2018, domestic private investors contributed the largest share (63 per cent and 51 per cent, respectively) of about ₹139,000 crore through debt and equity, while public finance sources supported this investment through a variety of instruments. The domestic public green finance expenditure by the government and its agencies totalled ₹71,000 crore ($9 billion) for the two years.
Government initiatives, including the expenditure undertaken by the dedicated public sector undertakings (PSUs) on climate-related mitigation activities, more than doubled from FY17 to FY18, while the budgetary allocations increased by 36 per cent.