Economic Survey Volume 2 Chapter 5 (Latest)







The chapter analyses the progress made by India in meeting its commitment towards the goal of climate change, sustainable development and energy access.


  • The UN Sustainable Development Goals (SDGs) adopted by the international community in September 2015 comprehensively covers social, economic and environmental dimensions and build on the Millennium Development Goals (MDGs). There are 17 SDGs which have 169 targets to be achieved by 2030.
  • Reinforcing India’s commitment to the national development agenda and SDGs, the draft national SDG indicators are being developed by Ministry of Statistics & Programme Implementation with inputs from Central Ministries and various other stakeholders.
  • India is one of the countries that has volunteered to take part in the Voluntary National Reviews (VNRs) at the High-Level Political Forum (HLPF) 2017.

India presented its 1st VNR on implementation of SDGs on 19th July, 2017 in the HLPF at United Nations, New York. The VNR report is based on an analysis of progress under various programmes and initiatives in the country. The VNR report focused on 7 SDGs:

 1 (No Poverty); 2 (Zero Hunger); 3 (Good Health and Well-Being); 5 (Gender Equality); 9 (Industry, Innovation and Infrastructure), 14 (Life below Water) and 17 (Partnerships for the Goals).

  • The NITI Aayog’s role will be to collect, validate and document best practices in implementation of SDGs for wider dissemination. On a regular basis, progress on SDGs will be tracked through an integrated dashboard.



Facts on India’s rural to urban transition:

  • According to the UN World Cities Report 2016, by 2030, India is expected to be – home to seven mega-cities with population above 10 million.
  • According to Census 2011, 377.1 million Indians comprising 31.16 per cent of the country’s population live in urban areas. India’s urban population is projected to grow to about 600 million by 2031.
  • Indian cities struggle with multiple problems. Government of India has undertaken several measures such as the Smart Cities Mission, National Urban Housing & Habitat Policy (2007), Swachh Bharat Mission (Urban), and management of Municipal Solid Waste (MSW) etc. to achieve SDG 11 which states “make cities inclusive, safe, resilient and sustainable”.
  • However, challenges remain such as financing (as 39 lakh crores is required for creation of urban infrastructure in next 20 years with additional 20 lakh crores for operation and maintenance as estimated by the High Powered Expert Committee appointed by the Ministry of Housing and Urban Affairs)
  • There is a need to encourage the Urban Local Bodies (ULBs) to raise resources through various innovative financial instruments. (In July 2015, SEBI notified a new regulatory framework – Issue and Listing of Debt Securities by Municipalities Regulations- for issuing municipal bonds)


According to World Economic and Social Survey, 2013, achieving the sustainability of cities entails integration of four pillars –

  • Social development
  • Economic development
  • Environmental management
  • Effective urban governance


  • Access to affordable, reliable, sustainable and modern energy is important for achieving the SDGs as it has deep inter-linkages with all the other goals such as good health, gender equality, industry, innovation, infrastructure, etc.


  • For instance – lack of access to clean cooking to around 64% of the population (world average – 38%) increases the burden on female members of the households to collect fuel wood. It also impacts their health disproportionately due to more exposure to indoor air pollution due to usage of such fuels. Thus, access to clean energy may reduce time spent on collection of fuelwood and may have a positive impact on girl’s education and employment (on an average, women spend around 374 hours every year for collection of firewood)


  • Therefore, government has taken various initiatives for improving access to clean energy:


  • Pradhan Mantri Ujjwala Yojana to provide LPG connections to BPL households.
  • “Ujjwala Plus” to address the cooking needs of deprived people who are not covered under the Socio-Economic Caste Census (SECC) 2011.
  • Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) to achieve 100 per cent village electrification and Saubhagya scheme to universal household electrification.
  • Focus on energy generation through sustainable sources. As on 30th November 2017, 18% of the total installed capacity of electricity was from renewable energy sources. However, this has also led to disputes relating to renegotiations of Power Purchase Agreements (PPAs).
  • For efficient energy use, Buildings Energy Efficiency Programme was launched. Under this scheme, Energy Efficiency Services Limited (EESL) is likely to retrofit about one crore LED lights, 15 lakh energy efficient ceiling fans, and 1.5 lakh energy efficient ACs in more than 10,000 government and private buildings by the year 2020.


Renegotiation of PPAs by certain states

PPA is a contract between purchaser of electricity and electricity generator setting out the terms and price for supplying electricity.

 In the case of renewable energy, state electricity regulatory commissions set the Feed-in Tariffs for the purchase of electricity from these sources. PPAs were signed based on these pre-determined prices for a number of years.


Problem: The recent auctions for solar power procurement have led to discovery of very low tariffs (Auctions for wind based power realized a tariff of Rs. 3.46/unit (Feb, 2017) and Rs. 2.64/unit (Oct, 2017) against the lowest feed-in tariff for wind of Rs. 4.16/unit]


This has led to some demands for renegotiation of the already signed PPAs. According to CRISIL (2017), renegotiating the tariffs could result in risk for investments worth Rs. 48000 crore

. It may also result in legal battles and banks (already facing the issue of NPAs) may become apprehensive of lending to the sector in the future.

Way Forward:

  • Enforcement of PPAs is crucial considering the government’s ambitious target of achieving 175 GW of renewable energy by 2022.
  • Affordable financing holds the key for financing sustainable energy projects.
  • Risk mitigating instruments such as payment guarantee fund or a foreign exchange fund available to developers.


  • ISA Framework Agreement entered into force on Dec 6, 2017 (signed on 30 Nov, 2015) in Paris.
  • The Paris Declaration establishing ISA states that the countries share the collective ambition to undertake innovative and concerted efforts for reducing the cost of finance and cost of technology for immediate deployment of solar generation assets.
  • This will help pave the way for future solar generation, storage and good technologies for each prospective member country’s individual needs by mobilizing more than US $ 1 trillion dollars in investments that will be required by 2030.
  • Government of India has made a provision of Rs. 100 crore as one-time fund for ISA Fund corpus. In addition, a recurring expenditure grant of 15 crore per annum for the period 2016-17 to 2020-21 has also been committed by India for meeting ISA’s day to day expenditure and meeting cost of outreach events etc.

ISA (International Solar Alliance) is a coalition of solar rich countries lying fully or partially between the Tropics of Cancer and Capricorn and aims to specifically address energy needs by harnessing solar energy.

Currently, 46 countries have signed and out of these, 19 countries have ratified the ISA Framework Agreement.

ISA is also the first International inter-governmental treaty-based organization headquartered in India.


  • The Government of India has earmarked around US $ 2 billion Line of Credit (LoC) to the African countries for implementation of solar and related projects out of its total US $ 10 billion LoC under the Indian Development and Economic Assistance Scheme.


Initiatives under ISA:

  • Presently ISA has three programmes Scaling Solar Applications for Agricultural Use, Affordable Finance at Scale and Scaling Solar Mini-grids.
  • ISA plans to launch two more programmes on Scaling Solar Rooftops, and Scaling E-Mobility & Storage.
  • Developing “Common Risk Mitigating Mechanism” (CRMM) for de-risking and reducing the financial cost of solar projects.
  • Establishment of Digital Infopedia which serves as a platform to interact, connect, communicate and collaborate with one another.



  • India has always engaged constructively under the United Nations Framework Convention on Climate Change (UNFCCC) and India is now actively engaged in the efforts towards developing guidelines for effective implementation of the Paris Agreement on climate change.
  • Domestically, India has launched various policies and set up institutional mechanisms to advance its actions:
  • National Action Plan on Climate Change is being implemented which includes eight national missions covering solar, energy efficiency, agriculture, water, sustainable habitat, forestry, Himalayan ecosystem and knowledge. 32 States and UTs have put in place the State Action Plans on Climate Change attempting to mainstream climate change concerns in their planning process.
  • National Adaptation Fund on Climate Change established in 2015 to support concrete adaptation activities which are not covered under on-going activities through the schemes of State and Central Government, continues till 31st March 2020 with financial implication of 364 crore.
  • India’s growth in the forest cover has been in the positive territory while that for Indonesia and Brazil, which are countries with substantial forest cover, the growth has been in the negative territory during the same period.
  • Pradhan Mantri Krishi Sinchayee Yojana has been formulated with the vision of extending the coverage of irrigation and improving water use efficiency.
  • Second Phase of Science Express Climate Action Special train with the aim to create awareness among various sections of society, especially students, on the science of climate change, the observed and anticipated impacts, and different possible responses as to how climate change can be combated.
  • Indian financial market also moved in the direction of greener actions. SEBI issued the circular on the disclosure requirements for Issuance and Listing of Green Debt Securities on 30 May, 2017.
  • In February, 2017, India launched the world’s first interoperable Quick Response (QR) code acceptance solution. It is a sticker pasted on the teller counter wall of the merchant and can be generated dynamically on merchant itself, removing the need to even print.
  • Zero Effect, Zero Defect is a policy initiative to enhance energy efficiency and resources efficiency in Medium & Small Industries.
  • The National Mission for Clean Ganga seeks to rejuvenate the river along its length of more than 2,500 km.


Air Pollution in Delhi – Possible solutions

In recent years, the National Capital Delhi and adjoining areas have experienced alarmingly poor air quality starting winter. Generally, the annual average PM 2.5 (being the most dangerous) levels remain about 3 times higher than the prescribed standards.

There are 4 top reasons for Delhi’s worsening air quality, especially in winter, about 30-40 per cent of which comes from outside the NCR region (crop residues, biomass, industries and power plants):

  • Crop residue, biomass burning (26-29%)
  • Vehicular emissions (23-28%) and redistributed road dust (20-27%)
  • Massive construction, power plants, industry, other (19-35%)
  • Winter temperature inversion, humidity and (absence of) wind.


A menu of effective actions has been suggested (National Green Tribunal and Supreme Court decisions; TERI, 2016), some of which have begun:


Short-Term Emergency Plan (when 24-hourly PM2.5 exceeds 300-400 mg/m3): Strict enforcement through heavy penalties on agricultural waste burning using satellite based tools detecting fires, and mobile based applications in NCR; and incentive payments to farmers, coordinated across states and NCR.


Medium and Long-Range Actions: Implement congestion pricing for vehicles, expand and improve public buses dramatically to reduce private vehicle use, and for connectivity to and beyond metro. Phase-out old vehicles, accelerate BS-VI (already notified and to be commenced from 2020), and expand modernized bus fleets.

Explore the business cases for finding uses for the crop residues such as manure to reduce fertilizer cost, generate power so that economic values could be assigned.

Use of technologies such as Happy Seeder machine (sows seeds without the need to remove paddy straw and works well when the straw is spread evenly on the field through the straw management system)




The Global Climate Risk Index 2018 has put India amongst the six most vulnerable countries in the world. Thus, Climate change has been given high importance in policy decisions. The Fifteenth Finance Commission Terms of Reference outlined climate change as an important aspect for consideration.


 It is necessary for developed countries to be compliant on their commitments based on historical responsibilities and the principle of equity and common but differentiated responsibilities. Acting upon their fair share of responsibilities by each nation would provide the pathway of low carbon climate resilient development for our Planet.


Common but differentiated responsibilities (CBDR): Principle of international environmental law establishing that all states are responsible for addressing global environmental destruction yet not equally responsible. The principle balances, on the one hand, the need for all states to take responsibility for global environmental problems and, on the other hand, the need to recognize the wide differences in levels of economic development between states. These differences in turn are linked to the states’ contributions to, as well as their abilities to address, these problems. CBDR was formalized in international law at the 1992 United Nations Conference on Environment and Development (UNCED) in Rio de Janeiro.