Post Covid-19 Recovery – Can India Make It Green?

Rommila Chandra

With the increasing number of causalities across the globe, COVID-19 has definitely changed our lives not only at a national level but as individual as well. It has not only exposed the global economy to fragile conditions but has also deepened the awareness for our environment and hygiene. After an unfortunate delay in response, the nations are announcing various fiscal policy measures to stir up their economies. The economic situation remains highly fluid and the uncertainty related to depth of health crisis related socio-economic impacts are still unknown. The pandemic is expected to cost a long-term repercussion for the tragic loss of lives and jobs that has completely derailed the career and businesses of many. The fiscal and monetary initiatives could also add to income and wealth disparities, which might increase social unrest in different countries. Difference in recovery approaches between countries is threatening the sustainability of global economy by jeopardizing international - political, economic and trade relations. It is also stressing the relations between developed and developing countries, by challenging their social alliance, traditional aspects of economy and the future global leadership. The global economic recession is expected to synchronously affect all regions, with some facing worse in comparison to others. In such critical conditions, the governments are trying to put their countries back on feet, but the pressing need of the hour is to implement cooperative and coordinated efforts by all the nations, together. Specifically, support and guidance are needed for the low-income and vulnerable countries which already have a weaker healthcare system and limited scope for policy interventions.

The world is calling the post COVID-19 phase a hidden opportunity for a green path to recovery. It could help nations build back their economies from ground zero, ensuring a healthy environment, healthy society and increased resilience for future crises. The starting point of Green Economy was October 2008, when United Nations Environment Programme (UNEP) launched the ‘Green Economy Initiative’ in order to provide policy support for the sustainable transformation of environmentally unfriendly economic sectors. In 2009, the ‘Global Green New Deal’ proposed a blend of policy actions that would enhance economic growth, along with improving the sustainability of the world economy. The programme focused on three major initiatives, namely, economic recovery, poverty eradication and reduction in carbon emission and environmental degradation. It is believed that Green Budgeting can increase the effectiveness and efficiency of budgetary process by aligning it with environmental responsibilities, scrutinizing harmful expenditures and unyielding incentives. Streamlining the inefficient government expenditure in important sectors like energy, transport and agriculture can be an important step. There are few instruments which are being globally talked about, mainly, carbon taxation and fossil fuel subsidy reform, where the government can incentivize green transport facilities, smart commute, innovative production technology, among others. Thus, a country needs to reassess their relationship with nature to help reduce the risks of future external stressors.

COVID-19 represents the collective vulnerability of the world towards any external trigger. It also highlights the importance of collective benefits gained by strengthening the resilience and adaptive capacity of all the nations, irrespective of its economic standing. At present, everyone shares a common interest i.e. eradication of the virus and economic recovery. Germany has announced a €130 billion stimulus package, with at least €40 billion being contributed to climate related investments for the reorganization of its energy and transport sector. Similarly, South Korea has outlined an initial investment of $10.8 billion for the implementation of the primary stage of its Green New Deal. It is going to target; green energy infrastructure, green energy industry and low carbon – decentralized energy expansion. The European Commission has also suggested to put European Green Deal at the forefront of Next Generation European Union. A recovery package worth €750 billion has been released with the focus on jobs, resilience of society and health of environment. These global announcements mark the beginning of “Green Recovery”, an opportunity post COVID-19. The main aim behind all these investments is a steady transition towards a climate neutral economy, with strategically strengthening the green sectors and regional value chains. However, these massive investments represent the developed nations, who are redirecting their available financial assets in an ecologically efficient manner. But the road for developing and low-income countries is still far ahead. In comparison to the developed nations who can elaborately redirect their government funds at a low rate and/or subsidy without the fear of inflation, the developing and under-developed nations cannot afford to do so. The human cost of the economic crisis is felt deeper in these countries as they have a weaker healthcare system, limited fiscal capacity and a high debt-to-GDP ratio. It would definitely require a greater systematic support, guidance and external financing to restructure their crumbling society. In the current situation of economic meltdown, it would be a daunting task for them to link their valuable assets towards a greener future. Thus, international support by the developed countries can actually help fulfil the needs of other countries by improving their domestic resource mobilization and/or utilization for a sustainable financing. 

The pandemic has made the Indian economy sensitive towards one of its major flaws i.e. “inequality”. With a population of 1.366 billion and GDP of 2.875 trillion USD (World Bank, 2019), the domestic policy decisions of a country as big as India can have global impacts on – climate, carbon and environment. India is emerging as one of the fastest growing economies in the world and is currently Asia’s third largest economy by GDP (World Bank Development Indicators). Will it be easy for the world’s biggest democracy to adopt green recovery? India has always followed the traditional model of economic development, with much focus on intensive agriculture, heavy industries, manufacturing and exports. These sectors are majorly powered by fossil fuels and cheap labor. The brown economy approach of India has lifted millions of people out of poverty, but all this has negatively impacted the environment and natural resources that are essential for sustaining future growth and development. India is looked upon by the other under-developed, developing and/or emerging economies for the global growth it has achieved. Thus, the Indian economy holds accountability to meet the developmental demands of its population within the environmental limits.

The concept of Green Growth aims at attaining economic growth and development that is socially inclusive and environmentally sustainable. The extent to which India’s economy will grow green will depend on its ability to efficiently utilize and significantly reduce the quantity of resources used to support economic growth. The major question for India is: how it can manage and minimize the fiscal deficit and public debt by green policy making? India has made two major global commitments: the 2030 Global Development Agenda or Sustainable Development Goals and the Paris Agreement. With an index score of 0.54, India ranks 36 out of 130 countries in the 2018 Global Green Economy Index (by Dual Citizens). India has a huge potential to transition from brown economy to green economy, however, the rate of transition is quite slow and inefficient in comparison to what is required at this stage of global environmental concerns. For the first time, through 12th Five Year Plan (2012-17) India made environmental sustainability the core of development strategy. India has also discarded its 5 Year Plans and instead has developed a 15 Year Plan. A 7-year strategy from 2017 to 2024 and a 3-year action agenda from 2017 to 2020 has also been proposed. The Nation’s Green Economy Plan aspires for a sustainable and balanced economic growth and also recognizes the importance of decarbonization (Government of India, Niti Aayog: Three Year Action Agenda 2017-18 to 2019-20).

India is continuously growing its green finance sector driven by policy innovations. The Companies Act, 2013 mandates all industries to invest in Corporate Social Responsibility initiatives. The Reserve Bank of India has also established sustainable development reporting guidelines for commercial banks. India understands the use of efficient energy system and mass stationing of renewable energy source; hence it became the first country to establish a dedicated ministry for renewable energy in 1982. A target of 20 GW of solar capacity by 2022 (set in 2010) was achieved four years ahead of schedule. Still India is the world’s fourth largest importer of coal, and it remains a negative factor in India’s green achievements. No national carbon pricing or trading scheme or market is yet developed in India and a tax on coal since 2010, is the only monitoring factor on coal usage. Even though the Federation of Indian Chambers of Commerce and Industry has setup a Green Bond Markets Development Council to accelerate green finance (particularly for clean energy), specific targets and policy commitments are lacking (based on UNEP finance inquiry: delivering sustainable financial system in India, final report).

Unfortunately, India has been ranked a low 117 out of 193 countries (as per Sustainable Development Report 2020), which assesses the overall performance of a country’s total progress towards achieving all 17 Sustainable Development Goals (SDGs). India has remained on track in maintaining four of the SDGs: SDG-1 (no poverty), SDG-6 (clean water and sanitation), SDG- 8 (decent work and economic growth) and SDG-13 (climate action). India has recorded a decrease in one of the SDGs: SDG 15 i.e. Life on Land, indicating that, though it is a good start but India has a long journey ahead in terms of Green Economy. Perception is the biggest barrier for India, that environmental protection and conservation comes at the cost of economic growth and development. The notion towards green and responsible investments are still at an initial stage and the system for its funding is inadequate. Even though green renewable technology is the finest alternative, still it is viewed as unreliable and not cost competitive. The impulse to thrive in global economy cannot be entertained any further, as India cannot afford to overlook environment anymore and/or deal it with later. The last couple of months have brought a humongous shift in the India’s economic sector. The Indian government is attempting to balance the increasing budget deficit weighed against financial support for national health system, social safety and unemployment. Are the relief schemes providing India an opportunity to take the much-awaited steps towards green economy? Can “sustenance” and “sustainability” both be the pillars of economic recovery as India fights the pandemic?

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Nov 21, 2020