Deepak Dwivedi
NEW DELHI: India’s green-led growth strategy marks an important evolution in policy thinking. The effort by NITI Aayog to align the 2070 net-zero goal with the ambition of becoming a Viksit Bharat by 2047 reflects intellectual confidence and geopolitical awareness. Recasting climate action as an engine of competitiveness rather than a brake on development is both timely and necessary.
Yet ambition must be tempered with realism. The green transition, if mismanaged, could expose economic vulnerabilities even as it seeks to cure them.
The first area of caution is energy security. While renewable capacity has expanded impressively, intermittency remains a structural challenge. Storage technologies are still costly, grid modernisation uneven, and distribution companies financially fragile.
Coal continues to anchor base load power. A premature erosion of thermal capacity without reliable alternatives could destabilise supply, raise tariffs, and hurt manufacturing competitiveness. Transition planning must therefore prioritise reliability as much as decarbonisation.
Second, industrial policy risks must be acknowledged. Production Linked Incentive schemes for solar modules, batteries and green hydrogen aim to reduce import dependence. But protection without performance discipline can breed inefficiency.
If domestic manufacturing fails to achieve scale and cost competitiveness, India could end up subsidising industries that remain globally unviable. Clean-tech nationalism, if not backed by innovation and productivity, may merely shift dependence from fossil fuels to imported critical minerals.
Third, financing the transition poses macroeconomic questions. Green infrastructure requires vast capital at a time when fiscal space is limited and private investment remains cautious.
Sovereign green bonds and blended finance are useful instruments, but they cannot substitute for deep financial sector reform. Carbon markets, too, must avoid volatility and opacity. Poorly designed trading systems can distort prices, encourage rent-seeking, and burden smaller enterprises disproportionately.
There is also the question of distributional impact. Coal-dependent districts, MSMEs with thin margins, and low-income households vulnerable to energy price spikes could bear the adjustment costs.
A just transition cannot remain rhetorical. It demands credible retraining programmes, targeted fiscal transfers, and social safety nets. Without such cushioning, green reform may provoke political resistance that slows its own progress.
Adaptation spending presents another dilemma. Climate-resilient infrastructure, water systems and agricultural reform are essential. But execution capacity varies sharply across states. Projects risk delays, cost overruns, and governance leakages. Cooperative federalism will succeed only if accountability mechanisms are strengthened alongside decentralisation.
Globally, trade-linked climate measures such as carbon border taxes introduce uncertainty. While proactive decarbonisation strengthens India’s negotiating position, compliance costs could weigh on export sectors before productivity gains materialise. Policymakers must guard against overestimating immediate green dividends while underestimating short-term competitive pressures.
Finally, technological optimism warrants scrutiny. Green hydrogen, battery storage and carbon capture remain evolving technologies with uncertain cost curves. Betting heavily on any single pathway could create stranded assets. Policy flexibility — not technological dogma — must guide the journey.
If prudence accompanies ambition, India can indeed transform climate responsibility into economic strength. If caution is ignored, however, the promise of green-led growth could collide with fiscal stress, industrial fragility and social unease. The opportunity is historic — but so are the risks.