Nationally determined contribution (NDCs) and green finance in India: an overview.

Abstract

Nationally Determined Contribution (NDCs) and Green Finance in India: An Overview*

Abstract:  To achieve India’s Nationally Determined Contribution (NDCs) under the Paris Agreement, India need approximately Rs. 162.5 lakh crores( USD 2.5 trillion) from 2015 to 2030 or approximately 11 lakh crores (USD 170 billion ) per year. To bridge the gap between the requirement of funds and availability of fund to achieve the India’s NDCs, concept of Climate finance or Green finance developed. In a broader term ‘Green Finance’ can be defined as funding for the environmental friendly technologies, product, services, industries, businesses and for environmental friendly initiatives. Green finance includes all the actions and initiatives such as developing, implementing and promoting projects that have sustainable impacts. Considering the importance of ‘Green Finance’ in the light of India’s NDCs, it is important to study the a) India’s journey towards the fulfilment of India’s NDCs by 2030 b) benefits and challenges of Green Finance and c) current status of Green Finance flows in India. From the study it is found that India is taking the issue of climate change very seriously from long past and there is a huge gap between the requirement of funds and availability of the fund to achieve India’s NDCs. Green finance in India is mostly (about 85 %) supplied domestically and again in domestic fund (about 60%) are supplied by the private players.  If we look into the growth of total global climate finance, growth of climate finance from private sources and growth of climate finance from public sources during the period 2011-12 to 2019-20, we will find a CAGR of 11.67%, 8.84% and 14.87 % respectively.  There are different advantages of green finance such as leading to low carbon economy, sustainable environment and sustainable development, ultimate better human life without destroying nature. It has also some challenges such as high borrowing cost of green bond in comparison to other corporate and Government bonds in India, false claims of environmental compliance made by the different corporates and government agencies.

Key Words: Green Finance, Climate finance, Sustainable finance, Nationally Determined Contribution (NDC), Panchamrita, Green Bonds, Green Mortgage etc.

*Dr. Nand Dulal Hazra, Assistant Professor of Commerce, Tamralipta Mahavidyalaya, Tamluk, Purba Medinipur, West Bengal, India, e-mail-nanda.hazra@tmv.ac.in