Issues related to Economic growth

Conquering the green frontier


From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 3- Sustainable economic growth and focus areas to achieve it.


India has to forge a different development model -one that will shift India’s workforce from agriculture to globally leading, resource-efficient businesses.

 How India can deliver sustainable prosperity?

  • The two intertwined forces: Just as liberalisation and globalisation transformed the economy in the past, two different yet intertwined forces will likely transform the economy in the future.
  • FirstHigh competitiveness: India must have globally leading companies across a range of key sectors such as financial services and manufacturing.
    • Global productivity frontier: These super competitive businesses should define the global productivity frontier so that they can surpass the production processes of the best companies in the world.
  • Second-Long term sustainability: India must also adopt a resource-efficient, low-carbon development pathway to utilise scarce natural resources effectively. There is no other way.
    • Apocalyptic air pollution.
    • Dire water shortages.
    • Rising temperatures and-
    • Extreme climate events- have already brought us to the brink of an environmental crisis.
    • The need for India’s leadership for achieving the target: Moreover, note that the world needs India’s leadership to achieve the 2 degree Celsius global warming target.
    • In short, India’s growth has to be green.
  • What is the problem in achieving these goals?
    • No nation has ever attempted these twin transformations — high competitiveness and long-term sustainability — simultaneously.
    • The traditional development model: The traditional development model has been a farm-to-factory development model with economies transitioning from traditional agriculture to resource-intensive, urban manufacturing.
    • India has to forge a different development model — one that will shift India’s workforce from agriculture to globally leading, resource-efficient businesses.
    • Also, these companies must use the most advanced green technologies and business models.
    • India’s development model will, therefore, need to take the Indian economy from “the farm-to-green frontier”.

Three focus area for green transformation

  • The productivity transformation driven by super competitive businesses is well underway.
    • We now need to consider a comprehensive policy package that will enable us to simultaneously undertake a green transformation.
    • Global best practices and India’s own experiences suggest three focus areas for such a transformation.
  • India has the third-largest start-up ecosystem in the world and our larger companies are also pursuing innovation-driven growth.
  • Specific and stable policy goals
    • Specific and stable policy goals need to be established to set detailed green targets for various sectors.
    • A macro-economic model that factors in-
    • Current skills.
    • Sectoral connections.
    • Relative emission and-
    • Financial constraints are necessary to inform such targets going forward.
    • Such a model can then be used to evaluate various green growth scenarios.
    • Decarbonisation approaches in the green frontier scenario will drive the growth of green industries, green jobs, green skills, green entrepreneurs and green finance.
  • Pursuing the policy goals: Global and Indian experience highlights that green targets will have to be pursued in a stable manner across decades.
    • Most large emitters and pollutants are associated with long-lived (20-30 plus years useful life) assets.
    • The basic requirement for investment in green assets: Investments in green assets will only be possible if there is the sanctity of contracts, pricing stability, and consistent policies that are backed up by the full force of law.
    • Implementation: Finally, these specific and stable policy goals need to be implemented urgently to avoid lock-in with high-carbon assets.
  • Revamp the institutional framework: India may need to revamp its existing institutional framework for environmental governance in order to align it with the country’s green transformation.
    • Four levels of institutional structure: As demonstrated by global best practices, a comprehensive institutional framework could include four levels — super sovereign, sovereign, state/province and city.
    • Council for monitoring: An independent council or board may also be required to monitor, report, and verify green targets.
  • Appropriate financing capacity: Indian policymakers and entrepreneurs will unleash market forces that will drive the growth of waste management, solar panels, electric vehicles, super-efficient appliances, recyclable food packaging, clean coal, etc.
    • These green industries will require massive investments and appropriate financing capacity will have to be created to support their growth.
    • Preliminary estimates suggest that India’s green transformation may require an average investment of $95 billion to $125 billion per year, aggregating over $1 trillion in the next decade.
    • A “green super fund” could be established to jumpstart green investments by pooling together international and domestic capital.
    • Dual roles of financial institution: Such a financial institution could play a dual role in mediating and mitigating risk for global capital, as well as identifying sectoral project pipelines.
    • The success of financial institution: Indian financial institutions have been very successful in building up new industries such as microfinance, EdTech, and affordable healthcare, which have delivered both financial and social returns; however, financial support for green industries will have to be orders of magnitude larger.
    • Moreover, the “green super fund” may have to be able to invest across the capital structure (debt plus equity) as well as across the company lifecycle (early stage, growth capital, infrastructure investments, and so on).


Our future depends on how we resolve our environmental challenges. Further, we are the world’s third-largest carbon emitter and will play a crucial role in getting the planet to a low-carbon trajectory. Simply put, we must urgently transform our economy to get to the green frontier.

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