Raising Domestic Corporate Funding for Aatmanirbhar Bharat

Manu Maudgal, October 12, 2022

Climate change is here and now. With over 80 per cent of India’s districts are vulnerable to climate change, and it is in India’s interest to make development choices that provide sustainable prosperity to its people and aid the global urgency to transition towardsNet Zero pathways.

Net Zero means a state in which the Green House Gases (GHGs) going into the atmosphere are balanced by removal out of the atmosphere. India’s  Net Zero goal announcement by 2070, presents both immediate (2030), medium term (2047) and long-term (2070) economic growth opportunities. Empirical studies estimate that Net Zero pathways are better for India compared to business-as-usual pathways. The economic logic is simple. Green technologies drive high-productivity growth in the economy and result in higher GDP growth, higher job creation, and lower energy imports, while reducing carbon emissions and air pollution[1].

Achieving the Net Zero objective requires a whole economy transition, upending established markets and creating new ones.

Net Zero Leading to Aatmanirbhar Bharat

Net Zero actions would need to be calibrated through significant committed structural governance, policy, and market shifts – near universal transformation of energy and land-use systems across agriculture, power and industry.

For India’s youth entering the workforce today, Net Zero especially holds the clear promise of progressive economic transformation, simply because the tenure for the better part of their careers shall be governed by the national consensus on climate change and the tangible impact on people’s lives.

The Aatmanirbhar Bharat Mission and other underlying measures such as the National Policy for Advanced Manufacturing, Coastal Economic Zones, Production Linked Incentive schemes (PLI), Development of Industrial corridors/Parks, Phased Manufacturing Programme, are some of the steps taken in this direction. Aatmanirbhar promises to raise the share of manufacturing sector in India’s gross value added to 25 per cent by 2030 from around 15 percent today. Manufacturing is expected to emerge as a potential exporter of goods worth over $1 trillion by 2030[2].

With unmitigated climate risk, Atmanirbhar Bharat faces profound human and economic consequences[3], which can constrain industry growth and innovation and impact job creation. Actions are needed to address reskilling and gender inequity in jobs. In the short and medium term, this can create socio-economic risks that could impair the transition itself. Actors pursuing India’s net zero pathway are truly in unchartered territory.

Charting the Net Zero course would require technology, ingenuity, and intent. The private sector may not be able to tackle the political-economic issues surrounding job creation, including regional and gender disparity, competitiveness driven shifts in demand and supply and bring alignment of disconnected actors and strategies. This requires an unprecedented access to finance and recourse to better technological solutions. Globally, there is an estimated capital need of $1-2 trillion per annum through 2050[4]. The Net Zero transition capital requirements for India alone are estimated around $50 billion per annum through 2050. The resulting economic growth can support India’s ambitious decarbonisation goals and raise overall standard of living.

Raising Public-Private-Philanthropic Partnerships

With Net Zero as a goal, India has  a huge advantage in attracting technology and finance for creating green infrastructure.

With public finances weak and rising debt, private sector spending is expected to shoulder the leadership in delivering innovative, low-carbon solutions, while  Government is expected to facilitate and guide the execution.

Varying demographics, economics and administrative constructs across India mean that these challenges to reach the Net Zero transition need to be explored in all its dimensions especially in the sub national context.

Philanthropy can actively facilitate the transition of such initiatives by focused efforts surrounding a few big Net Zero ideas that can unleash innovation at scale and speed. Amongst overall spend by philanthropy (estimated at Rs 119,000 Crore in 2021), deployment towards climate action is estimated to be just Rs 440 crore. While domestic corporate philanthropy is expected to grow strongly in the coming years (as it is directly proportional to India’s growth story), there is a need to initiate focused engagement to accelerate India’s climate response.

Outcomes, especially co-designed with corporate sector, can support job creation and enhance baseline skills (education, training) for the millions expected to enter the workforce especially women.

In the years leading to the centenary of independent India (2047) such Public-Private-Philanthropic partnerships can catalyse ambitious decarbonisation goals, raise overall standard of living and accelerate India’s socio-economic development.

References

[1] India’s Decisive Decade, Shri Jayant Sinha, Shaping Our Green Future, ORF, Nov 2021

[2] The Economist newspaper, May 2022

[3] 480 out of 612 districts in India, India Voluntary National Review 2020, NITI Aayog

[4] Investment Needs of a 1.5°C World, Bloomberg NEF, August 2022

Manu Maudgal is Head – Corporate and Philanthropic Engagement at Shakti Sustainable Energy Foundation