Now Reading: India’s climate finance gap: Rs 1.15 lakh crore raised, Rs 12-21 lakh crore needed yearly
-
01
India’s climate finance gap: Rs 1.15 lakh crore raised, Rs 12-21 lakh crore needed yearly
India’s climate finance gap: Rs 1.15 lakh crore raised, Rs 12-21 lakh crore needed yearly
India has raised about Rs 1-1.15 lakh crore through sovereign green bonds since January 2023, but its annual climate finance need is estimated at $160-288 billion (Rs 12-21 lakh crore), according to…
India has raised about Rs 1-1.15 lakh crore through sovereign green bonds since January 2023, but its annual climate finance need is estimated at $160-288 billion (Rs 12-21 lakh crore), according to studies by CEEW and CPI. Total climate finance reached only around $62 billion in 2024, less than half the requirement.
Private companies are reluctant to issue green bonds due to a shrinking 'greenium' of just 2-3 basis points, high certification costs, and poor tradability. Most finance flows through public sector channels. Adaptation projects for farms, cities and small businesses remain starved of capital.
Fragmented ratings and standards create confusion: credit ratings, ESG scores and green bond certifications use different yardsticks, often reaching opposite views on the same company. The finance ministry released a draft Climate Finance Taxonomy in May 2025, but coordination among RBI, SEBI and IRDAI remains weak, and climate risk is not yet priced properly across the financial system.
Indian Opinion Analysis
India’s climate finance gap is not a new problem. The National Action Plan on Climate Change was launched in 2008, and the country has had a dedicated Climate Change Finance Unit in the finance ministry since 2010. What has been missing is a single, legally binding architecture that forces public and private capital toward adaptation, the highest-need area. The Reserve Bank of India has issued guidelines on climate risk for banks, but the Insurance Regulatory and Development Authority of India (IRDAI) has yet to mandate climate-risk disclosure for insurers, leaving the most exposed sector unregulated. The Climate Finance Taxonomy released in May 2025 is a step, but it is a draft and non-binding. Without a law that makes climate-risk pricing compulsory for all financial institutions, the gap between announced intent and deployed rupees will persist. The next concrete signal is the final version of the finance ministry's taxonomy, expected later in 2025.
Source: cfo.economictimes.indiatimes.com
This brief was synthesised by AI from the source linked above.
