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To actualise the green budget, we need Green GDP calculation and a climate change ministry

Strong institutions are needed to make India’s ambitious green economy plans a reality. A dedicated ministry for climate change and Green GDP calculations will yield concrete institutional frameworks and targets to achieve

February 06, 2023 / 10:10 AM IST
Transitioning towards a fully green budget involves a comprehensive assessment of the environmental and social impacts of government spending and revenue policies.

Transitioning towards a fully green budget involves a comprehensive assessment of the environmental and social impacts of government spending and revenue policies.

Green growth was profoundly mentioned in the Finance Minister’s budget speech in this year's budget. It is part of the seven priorities of the government as part of their saptarishi programme. The budget speech mentions allocations to many programmes that contribute towards green growth and a low-carbon economy.

Focus on the green hydrogen mission, green credit programme, Govardhan programme to promote a circular economy, bio-input centres, protection and plantation of mangrove forests across coastal regions, and promoting lifestyle for the environment are a few hits.

However, transitioning towards a fully green budget involves a comprehensive assessment of the environmental and social impacts of government spending and revenue policies. Further, it means identifying opportunities to redirect resources towards more sustainable outcomes. This assessment can be done using a Green GDP calculation or other environmental accounting methods. Sadly, India still needs to do this.

What Is Green GDP? 

Green GDP measures a country's economic growth considering the environmental costs of economic activities. It is crucial for countries like India because it allows policymakers and government officials to assess the actual cost of economic growth and make informed decisions about sustainably developing the economy. By measuring India’s GDP in relation to environmental costs, policymakers can better understand the impact of economic growth on the environment and make decisions that will promote sustainable development.

* Additionally, an estimate of Green GDP can help identify areas where the country can improve its environmental performance and attract investments.

* It can also be used for international comparison and tracking progress towards achieving environmental sustainability goals.

* Further, it provides a complete picture of the cost of economic growth and can help policymakers make informed decisions about promoting sustainable development.

Calculating Green GDP

There is a lack of consensus amongst the scientific community on a single method for calculating Green GDP.  There are a few concerns, such as data availability and quality. Green GDP calculations require a wide range of data on environmental factors, such as air and water quality, deforestation, and biodiversity loss. In India, this data is slowly becoming available, but its quality must be checked. This may make it challenging to calculate Green GDP accurately.

The second concern is about methodological differences. There are many different methods for calculating Green GDP, each with its own strengths and weaknesses. Some methods may be more appropriate for India and its different agro-ecological regions, while others may be more suitable for different environmental impacts. As a result, it can be difficult to build a consensus on a single method suitable for India.

The third concern is political considerations. Green GDP calculations can have significant political implications, as they may indicate that India's economic growth has come at a high environmental cost. As a result, the government may be reluctant to adopt methods that could poorly reflect their performance.

Costs Of Environmental Damages

India’s GDP calculation does not factor in the costs of environmental damages or climate disasters. GDP is typically calculated by measuring the value of all goods and services produced. Climate-led disasters, such as floods, cyclones, and droughts, have significantly impacted the Indian economy for the past couple of years.

Still, their costs are not typically included in GDP calculations. A Green GDP, therefore, measures the costs of climate disasters and other environmental impacts, providing a more accurate picture of the actual cost of economic growth.

Gaps In India’s Green budget 

It is laudable that green growth is one of the seven-point agenda used by the Finance Minister. It will guide investments in renewable energy, energy efficiency, and sustainable transportation. However, a few gaps need to be filled to make India’s budget a truly green budget.

First, we need to identify the areas of environmental degradation and areas of the economy where environmental degradation has the greatest impact and take steps to address them. The Economic Survey 2022-2023, unfortunately, didn’t have enough analysis on this front that could have informed the green budget.

Second, we must monitor progress towards achieving environmental sustainability goals and identify areas where additional action is needed. Third, we must compare the environmental performance of India with other countries, which can help identify best practices and areas for improvement.

A Climate Change Ministry

However, these efforts will only be consolidated with institutional change to show us one storyline. India must create a climate change ministry and coordinate with other ministries to measure impactable change. Now, there is no single window for climate action.

Climate change is parked in the backyard of Ministry of Environment, Forest and Climate Change with around 20 more divisions under it and these are in the hands of a few retired officers working on a yearly contract. Instead, we need a ministry solely dedicated to climate change that provides an overall framework, coordinates action and consolidates impacts.

Dr Anjal Prakash is the Research Director at the Bharti Institute of Public Policy at ISB. He contributes to the IPCC reports.  Views are personal and do not represent the stand of this publication.

Anjal Prakash is the Research Director at the Bharti Institute of Public Policy at ISB. He contributes to the IPCC reports. Views are personal and do not represent the stand of this publication.

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