GDP (gross domestic product) has existed for approximately eight decades now. National statistical departments around the globe generate the System of National Accounts (SNA) and the subsequent indicator of GDP, which was adopted during the Bretton Woods Conference in 1944 and is now catalogued by nearly all United Nations Member States. Nonetheless, the deficiencies of GDP have been recognised for nearly as long as GDP has existed. Although GDP is a reasonable measure of determining economic effectiveness, its misunderstandings as a measure of happiness and social assistance, and thus its misappropriation in policy research, are unquestionably bothersome, especially regarding climate and environment-related legislation and policies.
Since the 1970s, one of the most common criticisms of GDP has been that it completely ignores environmental depletion and degradation. Alternatively, it can consider environmental depletion and degradation to be economic output. Chopping down forest areas and trading the forest products, for instance, would increase GDP amidst harming long-term welfare and capital formation. Concerns like these prompted the Rio Summit in 1992 to consider creating new accounts that would supplement the existing SNA by incorporating dimensions of sustainable development.
The official statistics community heeded these demands. The Handbook of National Accounting: Integrated Environmental and Economic Accounting were issued by the United Nations as an interim study in 1993. The System of Environmental-Economic Accounting (SEEA) introduced a new style of accounting that used the SNA’s core concepts and definitions to measure the environment and its link with the economy. The 1993 guidebook emphasised the economic evaluation of environmental assets, enabling the cost of environmental resource depletion and climate deterioration to be deducted from GDP. The handbook argued for creating an ‘ecologically calibrated domestic product,’ or ‘green GDP,’ specific.
Following the 1993 SEEA, various countries, including the United States, Australia, the Czech Republic and others, began experimenting with accounting and green GDP. Green GDP, on the other hand, has not taken off. Non-market valuation methodologies used to value environmental depletion and degradation were too experimental and unreliable in some nations, such as Norway. Green GDP’s detractors were not entirely unjustified. It is not optimal to base strategies on a single indication, no matter how well developed. As a result, the SEEA handbook’s third edition, published in 2003, provides a considerably more complete framework with a firm base in economical and practical accounting, including energy, water, material flows, and air emissions.
In keeping with the trend toward a dashboard approach, the SEEA EA allows users to produce a variety of indicators, such as the Sustainable Development Goals indicators and the future monitoring framework of the Global Biodiversity Framework. At the same time, it can contribute to creating a new type of green GDP that considers both the pros and negatives.
In the Indian context, the idea holds a slightly different approach. India’s explosive growth over the last ten years has resulted in more job opportunities and a higher standard of living. However, a deteriorating climate and diminishing natural resources have hampered its exceptional development record, necessitating huge moves toward a sustainable and decarbonised economy. Consumers’ attention has been drawn to a cleaner economy due to COVID-19, forcing brands to gravitate to sustainability. As a result, India must shift to a circular economy with the help of the government and enterprises. Countries are assessed based on waste management, air quality, biodiversity and habitat, fisheries, ecosystem services, and climate change in the 2020 Environmental Performance Index. India was placed 169th out of 180 countries among the top six major economies, lagging in green growth. Individually, India ranks 179th for Air Quality, 139th for Sanitation and Drinking Water, 103rd for Waste Management, 149th for Biodiversity and Habitat, 36th for Fisheries, and 37th for Climate Change (106).
India is becoming one of the world’s fastest-growing economies. It is currently the world’s sixth-largest economy by GDP and Asia’s third-largest economy. The global economy contracted significantly in 2020 because COVID-19 is expected to expand by 6.0% in 2021 and 4.9 % in 2022 due to macro recovery, reported IMF. In April-June 2021, India’s GDP increased by a record 20.1% to 32.38 lakh crore, compared to the previous period. According to the World Bank, India’s economy will grow by 8.3% in 2021 and 7.5% in 2022.
With roughly 1.3 billion people experiencing major environmental health concerns, India’s dismal performance is cause for concern. The Indian economy must continue to grow to achieve its development goals. The environmental ramifications of expansion, on the other hand, may be enormous since it would deplete natural resources such as minerals, water, and fossil fuels, driving up the cost of fuel, energy, and raw materials.
The extent to which India can achieve green growth will be determined by its capacity to minimise its reliance on the resources required to support economic growth over time, enhancing social fairness and job creation.
Green growth has the potential to help balance these demands. However, controlling public debt and fiscal deficits, two of the most significant roadblocks to national policymaking may hamper the technical improvements needed for green growth. Furthermore, the trade balance would be a crucial factor in macroeconomic policies. As a result, it is critical to grasp and optimise the development benefits of green growth interventions in critical sectors, including energy, trade, and income. Green growth is a win-win situation for all parties involved. By 2050, India would need to increase energy efficiency and energy intensity per unit of GDP by about 60%, a rate nearly twice that of historical levels. It will have to concentrate considerably more on the underdeveloped and rural areas, which will be the future drivers of green growth.
Given India’s massive infrastructure investment needed to achieve green growth and net-zero carbon emissions, achieving a net-zero target will be significantly more complex than in developed countries. Developing countries use the Green Bretton Woods framework to negotiate new standards for sustainable infrastructure finance and longer investment horizons. Green mortgages, green bonds, green tax incentives, green credit lines with banks, and green public-private partnerships are just a few tools available to support green growth. We will need to monitor the sources of energy inefficiency and pollution because they are the consequence of various global and local interacting activities and emission sources—commercial, industry, transportation, communication, sanitation, agriculture.
Given its young population and aspirations, India has more tremendous potential for green growth than China and the United States. Increased financial and technological resources to satisfy the country’s long-term infrastructure demands will go a long way toward achieving green growth goals. Consumers are increasingly choosing recyclable plastic packaging and fibre-based packaging to reduce environmental waste. When a company’s sustainability values are poor, they switch products or services, creating market chances for competitors to develop sustainable products. While fighting COVID-19, India must also chart a path to economic recovery to mitigate the adverse effects of climate change and foster long-term, sustainable, and equitable development.
Indian banking institutions have successfully established new sectors (like E-learning and cheap healthcare) that have provided monetary and social dividends. Still, financial assistance for sustainable enterprises will need to be orders of magnitude higher. Furthermore, the green super fund may need to be able to invest throughout the asset base for both the debt and the equity, along with the longevity of a business. How India addresses, our ecological problems will determine our future. In addition, as the world’s third-largest carbon emitter, India will play a critical role in guiding the globe toward a low-carbon future. To reach the green horizon, India needs to drastically alter our economy and do that with a sense of urgency visible in our policies regulating the same.
