RBI Article Outlines A Green Method For Calculating India’s GDP

India’s green gross domestic product has risen by 91% in the decade between 2009 and 2019 to Rs 166 lakh crore, according to an article in the Reserve Bank of India’s monthly bulletin. But challenges persist for India’s green mission.

While GDP is a measure of the value of final goods and services produced in a country over a year, green GDP adjusts that number for environmental harm or resource depletion caused as a result of economic activity.

The article’s calculation subtracts elements like carbon dioxide damage, particulate emission damage, and the opportunity cost of energy and forest depletion from GDP. The government’s expenditure on environmental protection is then added to arrive at green GDP.

“The trajectory of green GDP for India displays an upward movement with visible improvements since 2012,” the article authored by members of the RBI’s economic and policy research department said.

To be sure, the opinions of the authors does not reflect RBI’s stance in the matter.

“Furthermore, resource depletion, CO2 emission and material footprint, especially in the case of biomass and non-metallic minerals, are showing signs of considerable improvements which further support our findings,” the article said.

Even as green GDP has been growing strongly, there continues to remain a wide gap of Rs 38 lakh crore, with India’s GDP as of 2019.

India has also been using lesser amount of resources to produce additional units of GDP.

“The decrease in resource use—from 4.49 kg per unit of GDP in 2000 to 2.83 kg per unit of GDP in 2017—is primarily driven by a decrease in biomass use (grazed biomass, crop and crop residue) and non-metallic minerals,” the article said.

Carbon dioxide emissions per unit of GDP have also declined from 1.12 kg in 2012 to 0.93 kg in 2018.

India is progressing towards attaining the target of 50% non-fossil power generation capacity by 2030, including the buildout of 500 gigawatts of non-fossil sources.

Apart from higher share of renewable energy sources, India is also targeting improved energy efficiency through measures like sale of light emitting diodes or LEDs and compulsory audits for energy intensive firms, the article said.

The unavailability of data related to environmental indicators is among the challenges to further research in the area.

India has a dedicated Open Government Data platform for data dissemination, but it needs revamping to smoothen its use, the article said.

In this context, the Organisation for Economic Cooperation and Development and the Eurostat platform can be viewed for further improvements.

A dedicated in-house group in the Ministry of Environment, Forest and Climate Change may be formed for:

  • Providing time-series database required for estimation of green GDP.

  • Release estimates of green GDP for India periodically on a regular basis.

  • User-friendly data dissemination platform on the lines of the OECD and the Eurostat.

“The transition to a low carbon and climate-friendly economy would require a revamp of financial policy and regulation to ensure adequate finance,” the article said.

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