India must urgently transform its economy to get to green frontier

The forces of liberalisation and globalisation have transformed the Indian

economy

in the past three decades. Prime Minister Narendra Modi’s government has accelerated these trends by implementing a set of far-reaching reforms, which have led to macro-economic stability, a robust safety net for all and strong

growth

. We now have one of the most open market economies in the

world

and are poised to get to $5 trillion in GDP in the

next

few years. We must now consider how our

economy

can deliver sustainable prosperity in the

next

few decades. Just as liberalisation and globalisation transformed the

economy

in the past, two

different yet

Accept comma addition

different, yet

intertwined forces will likely transform the

economy

in the future.

First

, India must have globally leading companies across a range of key sectors

such

as financial services and manufacturing. 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

, 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.

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. No nation has ever attempted these twin transformations — high competitiveness and long-term sustainability — simultaneously. 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”. Opinion | Poonam Mahajan writes: We need a new Green Revolution — one that focuses on the environment The Modi government has made impressive progress in ending crony capitalism and strengthening entrepreneurial forces. India has the

third

-largest start-up ecosystem in the

world

and our larger companies are

also

pursuing innovation-driven

growth

. 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

.

First

, 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 emissions, and financial constraints is 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. 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. Investments in green assets will only be possible if there is sanctity of contracts, pricing stability, and consistent policies that are backed up by the full force of law.

Finally

, these specific and stable policy goals need to be implemented urgently to avoid lock-in with high-carbon assets.

Second

, India may need to revamp its existing institutional framework for environmental governance in order to align it with the country’s green

transformation

. As demonstrated by global best practices, a comprehensive institutional framework could include four levels — super sovereign, sovereign, state/province and city. An independent council or board may

also

be required to monitor, report, and verify green targets.