India’s Green Financing Need Likely To Be 2.5% Of GDP Annually Till 2030: RBI
India’s green financing requirement is estimated to be at least 2.5 per cent of gross domestic product (GDP) annually till 2030, said the Reserve Bank of India (RBI) in its report on currency and finance (RCF) for the year 2022-23.
The report titled 'towards a greener cleaner India', stated that India’s goal of achieving the net zero target by 2070 would require an accelerated reduction in the energy intensity of GDP by around 5 per cent annually.
This is a significant improvement in its energy mix in favour of renewables to around 80 per cent by 2070-71, the report added.
"A balanced policy intervention with progress ensured across all policy levers will enable India to achieve its green transition targets by 2030, making the net zero goal by 2070 attainable," as per the report.
The report also stated that India has embarked on a targeted and time-bound climate action plan to reduce carbon emissions and currently ranks the best amongst G-20 countries, as per the Climate Change Performance Index 2023.
Notably, the report also mentioned that demand shocks can arise due to the loss of wealth of firms and households on account of frequent natural disasters.
"Physical and transition risks can affect the balance sheets of financial institutions and banks, limiting the flow of credit to the real economy," it added.
It also added that climate-induced uncertainty can make households save more for precautionary purposes, bringing down the real equilibrium interest rate.
"There are several channels through which climate change can affect monetary transmission," it stated.
