The latest Report on Currency and Finance published by the Reserve Bank of India (RBI) has focused on the role that central banks can play in respect of climate change. It starts off expressing some doubts but quickly changes tack to say that the RBI is all for it. So on the one hand it says “climate change in the context of central banks has come to be regarded as ‘mission creep’”. On the other it says “central banks are uniquely placed to address climate change”. Then it says ever since 2007 the RBI has been engaged with climate change. But just a few paragraphs earlier it observes that “introducing climate change as an explicit mandate may require complex and cumbersome amendments in the existing institutional structures…”. All things considered, it seems fair to infer that the RBI is a reluctant participant in the battle against climate change. Its contributions are likely to be more for the sake of form rather than be of any substance.

And it would be absolutely right in adopting this approach — as would other central banks — not only because their charters are to deal with price, not climate stability, but also because it is futile to try and solve a cosmic sized problem with a puny instrument like monetary policy. The RBI acknowledges in one place that this is something for fiscal policy. But even that is unlikely to be of much use as the primary goal of fiscal policy, globally, is welfarism now, especially in view of growing populations and the resulting inequality.

Indeed, if there is any one thing that’s responsible for the things that are causing the climate to change so rapidly, it’s the politics of inequality where politicians the world over are promising levels of consumption that are possible only by doing things that will cause the climate to change. This, in fact, is what the developed countries have done. They have become hugely rich at the expense of the climate. They can’t duck their responsibility now by asking the developing countries to aspire for low consumption. It is they who should be halving their consumption of everything. But this is impossible politically which is why they keep asking India and China why they have so many people. The racism inherent in this cannot be ignored.

That said, it’s also true that since we all live on this planet, some adjustments have to be made by the developing countries too. In this regard, the time has come to stop viewing the problem solely in terms of GHGs and start viewing it in terms of per capita incomes. The negotiations must be about a benchmark per capita income level towards which everyone moves. That is, the rich countries will have to become ‘poorer’ if they want to stop climate change without insisting that the poor countries must make all the adjustments. Morally, that stinks.