By Anuska Roy
India’s recent heatwaves serve as a stark reminder of the urgent need for climate action. According to the Union health ministry, 143 people have died due to the heatwave in 2024 alone. These numbers, last updated on June 20th, present a concerning picture for India’s climate crisis. The highest fatalities of 36 deaths were recorded in Uttar Pradesh followed by the states of Rajasthan, Odisha and Bihar.
Data reveals that 40,272 cases of suspected heat stroke were reported. The escalating death tolls, climate migration, and the increasingly tangible impacts on livelihoods underscore that climate change is not just an environmental issue—it’s an economic one.
According to estimates by the ICWA (Indian Council of World Affairs), India will witness 45 million people migrating due to climate change by 2050. For example, statistics show 25% of principal earners of families in Sundarbans have been forced into migration for work.
Rising sea levels have adversely affected agriculture and fishing in the region, primarily impacting the livelihoods of local communities dependent on these activities, exacerbated by the increasing salinity levels. Hence, the implementation of green policies is a critical driver behind India’s economic growth.
According to an IPCC report, the world needs to achieve net zero emissions by 2050 to keep global temperatures above pre-industrial levels from rising more than 1.5℃. With 85% of investors now prioritising sustainability, the pressure is on governments to implement green policies that can drive long-term economic growth India. The shift to a green economy is highlighted by transitioning to sustainable practices that keep environmental preservation and resource conservation at the forefront.
What is Transition to a Green Economy?
Transitioning to a green economy entails reimagining existing fiscal models and policies to prioritise environmental sustainability while harbouring economic growth and social well-being. This can be achieved by practices that limit carbon emissions, push for the conservation of resources, and focus on adopting renewable energy sources. The green economy shift envisions a balance between economic growth and ecological preservation. Economic growth in India has been advancing at a considerable rate. It is currently the sixth-largest economy measured by GDP globally and the third-largest in Asia.
However, India ranks 169 out of 180 countries in global rankings for environmental performance.
India’s poor performance is a cause for worry, with nearly 1.3 billion people facing severe environmental health risks. The sustainable development goals of India need to be met while the economic growth of India continues to flourish. Green policies stand as a promising avenue where the economy reduces its dependence on natural resources, consequently improving social equity and promoting job creation.
Green growth would be a key indicator in supporting these priorities. There has also been widespread public support for climate action. This trend is especially noticeable among millennials and Gen Z. According to a study by Gartner, 85% of investors are now considering sustainability as a defining factor.
Benefits of the Transition to a Green Economy
Investors are pivoting towards investing in the green sector not only because of ethical considerations but also because it greatly benefits the company’s profits.
Firms that adopt green policies are seen to have a more credible reputation along with a loyal consumer base. According to a study conducted by NielsenIQ in 2022, 83% of global consumers are willing to pay more for sustainable products. Moreover, an IBM study reveals 70% of Gen Z consumers are willing to pay a premium for sustainable products. Companies that focus on climate responsibility are also better able to meet governmental regulations. Hence, the bottom line for businesses is that greener is leaner.
Firms with green policies have a higher efficiency rate and reduced waste production. U.S. firms involved in selling green products and services saw their stock prices rise by an average of 10% in the week after the unexpected success of the Paris Agreement.
This rise translates to an increase in market capitalisation of around USD 200 million per firm, with a total aggregate increase of USD 12.6 billion in market capitalisation for the 63 most environmentally friendly firms in the U.S.
Moreover, government subsidies are seen to be lucrative for businesses where products are cheaper while companies continue to drive profits. For example, under the Jawaharlal Nehru National Solar Mission (JNNSM), subsidies are provided to solar power developers, encouraging investment in solar energy generation. These subsidies directly reduce the financial burden on businesses by covering a portion of their costs, lowering the upfront investment required, making these projects more financially viable.
Investment-friendly regulations simplify operations and enhance business prospects. As fossil fuel costs soar, the growth potential of the renewable energy sector expands.
Last month, June 2024, marked a historic shift, with solar energy investments surpassing those in oil for the first time, signalling a global pivot in energy trends.
Additionally, the availability of green investment products has surged, providing more opportunities for sustainable growth. For instance, in an effort to attract money for renewable energy projects, the Indian Renewable Energy Development Agency (IREDA) issued India’s first Green Masala Bond in 2017. The purpose of these bonds is to draw in investors who are looking to make investments that are ecologically friendly and sustainable.
Furthermore, in an effort to encourage businesses to collect money for environmentally friendly initiatives, the Securities and Exchange Board of India (SEBI) has issued rules for Social Bonds and Green Bonds. In addition to encouraging the construction of renewable energy infrastructure, this programme offers investors the chance to fund ecologically conscious projects with the possibility of tax breaks and profitable profits.
India is currently grappling with high unemployment, which also hampers the country’s ability to drive economic growth. According to the International Labour Organisation, the shift to green policies could potentially create 24 million new jobs. Another significant benefit is a lower turnover for employees. The consumer base’s preference for green companies is mirrored in the younger generation of early career professionals, who are increasingly choosing companies that align with their visions of environmental sustainability.
Boosting Efficiency And Driving Economic Growth For India
Moreover, green policies also focus on driving productivity with a higher focus on efficiency. They lead to reduced waste production as economies become circular economies, along with products and services that drive India’s sustainable development goals. The production of renewable energy is more cost-effective than fossil fuel consumption in countries like Australia, India, and China.
This leads to subsidised energy prices which in turn boosts industrial production. According to the International Monetary Fund, India’s government debt eased to 81% of GDP in 2022 and is projected to decline to 80.5% by 2028. Debt stress often stems from sizeable current account deficits driven by fuel imports, and India has been importing more fuel due to declining domestic natural gas production. These fossil fuel imports significantly drain foreign exchange for developing countries.
Conversely, renewable energy sources like solar and wind are typically produced domestically, preserving foreign exchange reserves. This shift to renewables also insulates the economy from volatile global energy prices, allowing for more stable and long-term economic planning.
The transition to a green economy adds many advantages to economic growth India. It fosters innovation and boosts the development of sustainable technologies and practices. Green sectors such as renewable energy and waste management contribute to long-term prosperity. Moreover, transitioning to a green economy enhances resource efficiency and yields significant business cost savings.
Companies can lower their operational expenses by implementing energy-efficient technologies, adopting sustainable supply chain practices, and optimising resource utilisation. Minimising waste, optimising energy consumption, and embracing circular economy principles not only lead to substantial cost reductions but also boost competitiveness in the market. To fully utilise the benefits of the transition to a green economy businesses need to listen to policymakers.
It is crucial for governments to provide incentives and funding to facilitate this transition while mitigating risks for companies. Ideas for driving sustainable economic growth in India could include tax incentives, grants and subsidies for green investments, and more robust frameworks that drive sustainable practices.
For businesses, a successful transition to a green economy demands a comprehensive strategy that integrates sustainable practices, stakeholder engagement, and continuous innovation. Some examples to weave together the various elements of driving sustainable economic growth are:
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Tax Incentives and Financial Support
To encourage investment in renewable energy and other green technologies, the government offers accelerated depreciation benefits. This allows businesses to write off investments in renewable energy assets more quickly, thereby reducing tax burdens and incentivizing capital expenditure in sustainable infrastructure.
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Grants and Subsidies for Green Investments
The Ministry of New and Renewable Energy (MNRE) provides substantial subsidies for solar power, wind energy, and other renewable projects. These financial incentives are crucial in lowering initial investment costs and making sustainable projects financially viable in the long run.
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Regulatory Frameworks and Policy Guidance
SEBI’s guidelines on Green Bonds and Social Bonds have facilitated the issuance of bonds for financing green projects. These guidelines ensure transparency and accountability, attracting investors keen on environmentally responsible investments. Moreover, India’s National Action Plan on Climate Change sets clear targets and policy frameworks to drive energy efficiency and sustainable development across sectors.
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Integration of Sustainable Practices
Businesses are increasingly required to disclose their environmental, social, and governance (ESG) metrics through corporate sustainability reporting. This promotes transparency and accountability in their sustainability efforts, aligning corporate goals with national environmental objectives.
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Stakeholder Engagement and Collaboration
Public-private partnerships play a vital role in advancing sustainable infrastructure projects. These collaborations leverage the strengths of government bodies, private enterprises, and civil society organisations to foster innovation and community involvement in sustainable initiatives.
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Promoting Innovation and Technology Transfer
Government grants support research and development in clean technologies, encouraging the emergence of innovative solutions to sustainability challenges. Additionally, technology transfer programs facilitate the adoption of advanced technologies from global leaders, enhancing environmental performance and operational efficiency in Indian industries.
This strategy should include thorough assessments of current operations, setting ambitious sustainability goals, and investing in the research and development of green technologies. Additionally, collaboration with suppliers, customers, and industry peers is essential to drive collective action and build a sustainable value chain.
Conclusion
India’s environmental policy necessitates an urgent shift from a development-centric to an environment-centric approach. While advancing solar energy, electric vehicles, and other technological solutions is beneficial, it is insufficient. Protecting forests, preserving biodiversity, conserving energy, and modifying lifestyles are crucial to combating climate change.
Strengthening regulatory frameworks with stringent penalties for environmental violations and incorporating sustainability metrics into the ‘Ease of Doing Business’ index are essential steps. Nationally prioritising climate education will cultivate urgency and promote green practices among citizens.
Key initiatives driving this transformation include tax incentives for renewable energy investments, subsidies for green technologies, and regulatory frameworks promoting transparency and accountability in corporate sustainability reporting. As India’s industrial landscape embraces these changes, conglomerates like Tata Group and innovative startups exemplify leadership in circular economy practices and clean technologies, underscoring India’s potential to lead global efforts in sustainable industrial development.
The country must transition from declarations to actual, holistic environmental strategies and concrete steps. Fulfilling the Paris Agreement commitments is vital not only for ecological balance but also for socio-economic progress. As India strengthens its global environmental stance, aligning international promises with domestic policies is crucial for a lasting environmental legacy. The urgency of this action is paramount, bearing significant consequences for future generations.
