India is highly vulnerable to the impacts of climate change, experiencing increasingly severe floods and disruptions to its agricultural sector but, this vulnerability also presents a unique opportunity for India to pursue a green economic transformation.

India’s Climate Challenges Driving the Green Economy Transition

• Rising Frequency of Extreme Weather Events: India faces frequent floods, heatwaves, and cyclones due to climate change.
  • The 2023 Himachal Pradesh floods caused extensive damage to infrastructure, including energy networks, emphasizing the fragility of fossil fuel-dependent systems.
• Agricultural Vulnerability: Erratic monsoons and rising temperatures impact crop yields, threatening food security and farmer incomes.
  • Climate change could reduce wheat yields by 19.3% by 2050 and 40% by 2080.
• Rising Sea Levels: Coastal cities like Mumbai and Chennai face threats from sea-level rise, endangering livelihoods and infrastructure.
  • Example: By 2050, 36 million Indians could be displaced due to coastal inundation.
• Water Scarcity and Declining Groundwater: Per capita water availability dropped from 5,177 m³ in 1951 to 1,486 m³ in 2022, driven by overuse and climate-induced water stress.
• Dependence on Energy Imports: India’s reliance on imported oil and gas makes it vulnerable to global price fluctuations.
  • Transitioning to renewable energy can reduce India’s current account deficit, as renewable energy generation reached 203.18 GW in October 2024.
• Public Health Impacts: Climate change increases vector-borne diseases and water scarcity, affecting vulnerable populations.
  • 37.7 million Indians are affected by waterborne diseases annually.

Enroll now for UPSC Online Course

About Green Economy

• As per UNEP, a  green economy is defined as an economy that is low carbon, resource efficient and socially inclusive.
• In a green economy, growth in employment and income are driven by public and private investment into such economic activities, infrastructure and assets that allows reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem services.

Significance of Green Energy Transition

• Environmental Sustainability: Reduces greenhouse gas emissions, combating climate change.
• Energy Security: Reduces dependence on fossil fuel imports, enhancing self-reliance.
  • India has abundant solar, wind, and biomass resources.
  • Rajasthan and Gujarat lead in solar energy generation, while Tamil Nadu excels in wind energy.
• Economic Growth: Creates green jobs and attracts investments in new technologies.
  • Renewable energy sectors created 238,000 jobs in solar energy alone in 2023. Decentralized solar and microgrid projects offer rural employment opportunities.
  • India will need 8.5 million jobs in the renewable energy sector by 2050
• Global Commitments: Aligns with India’s goals under the Paris Agreement to reduce emissions intensity by 33-35% by 2030 (from 2005 levels).
• Improved Quality of Life: Reduces air and water pollution, benefitting public health.
• Global Leadership: India is setting an example for other developing nations in balancing economic growth with sustainability.

Challenges in India’s Transition Towards a Green Economy

• High Initial Costs and Financial Barriers: Transitioning to a green economy requires substantial investments.
  • India will require investments of around USD 200 billion to establish renewable energy (RE) generating assets by 2030.
  • NITI Aayog estimates $10.1 trillion by 2070 for net-zero goals, but clean energy investments in 2022 stood at just $17 billion.
  • With heavy investment, India’s fiscal burden could increase, impacting India’s fiscal deficit and public debt levels.
• Technological Dependence on Imports: India heavily relies on importing green technologies like solar panels, batteries, and wind turbines.
  • Dependence increases vulnerability to global trade dynamics and supply chain disruptions.
  • China was India’s main supplier of solar modules in FY24, accounting for 62.6% of India’s total solar imports of $3.89 billion​.
• Social and Employment Challenges: Transition impacts workers in carbon-intensive sectors who lack the skills to transition to green jobs.
  • Coal-dependent states like Jharkhand and Chhattisgarh face employment risks without reskilling programs​.
• Policy and Regulatory Gaps: Fragmented and inconsistent policies hinder long-term green investments.
  • Frequent tariff changes and duties, such as the Basic Customs Duty (BCD) on solar imports, deter investors​.
• Land Acquisition and Community Resistance: Renewable energy projects require vast land, often leading to displacement and protests.
  • The Bhadla Solar Park in Rajasthan and Karnataka’s Pavagada Park faced local resistance over land use and compensation issues​.
• Urban and Waste Management Challenges: Rapid urbanization increases the burden on waste management systems.
  • Only 22-28% of urban waste is processed efficiently​.
• Climate Impacts on Renewable Energy: Erratic weather patterns reduce efficiency and disrupt renewable energy generation.
  • Wind energy projects in Tamil Nadu face decreased output due to unseasonal wind patterns​.
• Limited Public Awareness and Behavior Change: Public engagement in sustainable practices remains low.
  • Only 25% of households are aware of energy efficiency labels like the BEE star rating​.
• Unequal Development Among States: States dependent on carbon-intensive industries lag in adopting green initiatives.
  • Coal-reliant states face greater challenges in transitioning compared to proactive states like Gujarat​.
• International Climate Finance Deficit: India receives limited financial support for its green initiatives.
  • Commitments from international forums like COP29 have fallen short of addressing India’s climate finance needs​.

Check Out UPSC CSE Books From PW Store

Government Initiatives and Commitments Towards a Green Economy in India

• Renewable Energy Expansion
  • National Solar Mission: Part of the National Action Plan on Climate Change (NAPCC), it targets 100 GW of solar energy capacity by 2022, later expanded to 280 GW by 2030.
  • Green Energy Corridor: Supports the integration of renewable energy into the grid by building transmission infrastructure.
  • Renewable Energy Targets: India aims to achieve 500 GW of non-fossil fuel-based energy capacity by 2030.
• National Green Hydrogen Mission
  • Launched to promote green hydrogen as an alternative to fossil fuels.
  • Target: 5 million metric tonnes of green hydrogen production annually by 2030.
• Electric Vehicles (EVs) Promotion
  • FAME India Scheme (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles): Supports EV adoption with subsidies for electric cars, buses, and charging infrastructure.
  • The PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme was launched in Oct 2024 for a period of two years to promote the adoption of electric vehicles (EVs) across India.
• Circular Economy Initiatives
  • Circular Economy Cell: NITI Aayog established this cell in 2022 to coordinate the implementation of circular economy action plans.
  • Voluntary Vehicle-Fleet Modernization Program (V-VMP) (2021): Aims to phase out old and polluting vehicles.
• Urban Development and Sustainability
  • Smart Cities Mission: Integrates sustainable urban planning with a focus on green buildings, efficient transport, and renewable energy adoption.
  • National Cooling Action Plan (NCAP): Aims to reduce cooling demand by 25-30% by 2037-38 through energy-efficient technologies.
• Afforestation and Ecosystem Restoration
  • National Afforestation Programme (NAP): Aims to increase forest cover on degraded lands by 20 million hectares by 2030.
  • Mangrove Initiative for Shoreline Habitats and Tangible Incomes (MISHTI): Promotes mangrove conservation for coastal ecosystem protection.
    • Launched in 2023-24 and will be Implemented over five years from 2023 to 2028. 
• Waste Management
  • Swachh Bharat Mission: Promotes waste segregation and processing to reduce landfill dependency.
    • 97% of wards in India have 100% door-to-door waste collection.
• Green Finance Mechanisms
  • Sovereign Green Bonds: Issued ₹16,000 crores in 2023 to finance renewable energy projects.
  • Creation of a Green Credit Guarantee Fund to support MSMEs in adopting green technologies.
• International Commitments
  • Paris Agreement: India committed to reducing its emissions intensity by 33-35% by 2030 (from 2005 levels) and achieving net-zero emissions by 2070.
  • Nationally Determined Contributions (NDCs) under the Paris Agreement:
    • India aims to create an additional carbon sink of 2.5-3 billion tonnes of CO₂ equivalent by 2030 through afforestation and tree cover enhancement.
    • Current progress: Achieved an additional 2.29 billion tonnes of carbon sink since 2005.
  • One Sun, One World, One Grid (OSOWOG): Initiative by the International Solar Alliance (ISA), India, France and the United Kingdom to build a global green energy grid.
• Agriculture and Rural Sustainability
  • National Mission for Sustainable Agriculture (NMSA): Focuses on climate-resilient farming practices like precision agriculture, organic farming, and water-use efficiency.
  • PM-KUSUM Scheme: Promotes solar-powered irrigation systems and off-grid solar pumps for farmers.

Way Forward for India’s Green Economy Transition

• Enhancing Green Finance Mechanisms: India needs innovative financial solutions to bridge the funding gap for green initiatives.
  • Expand issuance of Sovereign Green Bonds.
  • Establish a Green Credit Guarantee Fund for MSMEs.
  • Leverage international climate finance through partnerships with global institutions like the Green Climate Fund.
• Blended Financing: Public capital must be invested judiciously to attract private capital through innovative financial instruments, such as blended financing. 
  • Allow the government to allocate its budget to other important activities.
• Boosting Domestic Green Technology Manufacturing: Reducing dependence on imported renewable technologies is crucial for energy security.
  • Expand the Production-Linked Incentive (PLI) Scheme for solar modules, batteries, and green hydrogen equipment.
  • Invest in R&D for indigenous clean energy technologies.
• Skilling and Workforce Transition: Preparing workers in carbon-intensive industries for green jobs ensures an equitable transition.
  • Implement large-scale reskilling and upskilling programs in renewable energy, EV manufacturing, and sustainable agriculture.
• Strengthening Policy and Governance Frameworks: Streamlining policies can attract long-term investments and improve implementation.
  • Develop a National Green Economy Policy for cohesive action across sectors.
  • Enhance inter-departmental coordination to accelerate renewable energy project approvals.
• Promoting Sustainable Consumption and Circular Economy: Encouraging resource efficiency and reducing waste can drive sustainability.
  • Implement public awareness campaigns on sustainable practices.
  • Strengthen regulations and incentives for recycling, reuse, and waste-to-energy projects.
• Fostering State-Level Green Initiatives: Unequal development among states must be addressed to ensure nationwide progress.
  • Provide fiscal and technical support to coal-dependent states for diversifying their economies.
  • Promote state-specific green energy projects to harness regional strengths, such as solar in Rajasthan or wind in Tamil Nadu.

Enroll now for UPSC Online Classes

Conclusion

India’s transition to a green economy presents both challenges and opportunities, requiring coordinated efforts across policy, finance, and technology. By fostering innovation, promoting inclusivity, and strengthening governance, India can achieve sustainable development while positioning itself as a global leader in the green economy.

DOWNLOAD PDF