India is currently confronted with a pressing need to make substantial investments in climate adaptation to maintain its progress in development. Recognizing the significant impact of climate change on growth and development, India has incorporated its adaptation strategy into its broader development objectives. Despite the government’s efforts to finance adaptation initiatives, the investment requirements for adaptation at the national level are substantial and expected to increase in the future.
A recent study has delved into India’s approach to adaptation, the related investment needs, funding shortfalls, and avenues for bridging these gaps through both public and private finance. The report has also examined the existing challenges in financing adaptation at the subnational level in India, as well as potential strategies to scale adaptation finance. Based on the findings of this report, recommendations have been made to expedite action.
One significant insight from the report is that India has not yet established a common framework for climate risk or a systematic methodology for evaluating the extent to which development programmes address climate risk and vulnerability. Despite these systemic issues, there has been a growing momentum for action on climate adaptation, resulting in relevant plans, policies, institutions, and schemes at both the national and state levels. However, the progress and focus of these policies and schemes vary from state to state.
Due to the local nature of adaptation, states bear the primary responsibility for adaptation-related interventions. The report highlights that states which have updated their State Action Plans on Climate Change in recent years have significant adaptation investment needs. The analysis reveals that the annual investment needs of six states alone amount to INR 444.7 billion (USD 5.5 billion) from 2021 to 2030.
However, many states face challenges in financing their adaptation investment needs. Over the past few years, state finances have been strained by factors such as the economic slowdown in 2019-20 and the COVID-19 pandemic, limiting their ability to invest in climate adaptation. Additionally, states are also constrained by borrowing limits under new fiscal rules and pressure to reduce existing debt burdens, further restricting their ability to bridge the adaptation funding gap.
In view of these challenges, strategic interventions have been recommended to strengthen state fiscal capacity and mobilise private finance for climate adaptation. The report proposes the inclusion of adaptation-related interventions in the upcoming discussions of India’s Finance Commission to guide the allocation of funds to state governments. It suggests implementing mechanisms such as time-bound, climate-incentivised borrowing limits tailored to state-specific vulnerabilities, to facilitate increased access to finance for climate-vulnerable states.
Furthermore, developing a robust green finance data infrastructure to inform investment decisions and enhance transparency has been put forth as a key recommendation. Additionally, promoting financial mechanisms such as public-private partnerships and blended financing to stimulate private-sector investment has been identified as crucial in closing the adaptation funding gap.
In conclusion, addressing the funding gap for climate adaptation in India requires a strategic and multi-faceted approach. By implementing the recommendations laid out in the report, India has the opportunity to strengthen its fiscal capacity at the state level and mobilise private finance to support climate adaptation efforts. This is essential for the country’s sustainable development and resilience against the impacts of climate change.
+ There are no comments
Add yours