Must balance climate considerations and growth hopes, says CEA Nageswaran

CEA V Anantha Nageswaran (Illustration: Moneycontrol)

A month before India assumes presidency of the G-20, the government’s top economist has said discussions on climate change must balance growth hopes.

Addressing the 14th annual international G-20 conference at the Indian Council for Research on International Economic Relations, Chief Economic Advisor V Anantha Nageswaran said that while emphasis on mitigation and carbon pricing is an important mechanism for international organisations and developed nations, the “legitimate growth aspirations” of developing nations had to be recognised.

“There is a need to balance the growth aspirations and climate considerations for many developing economies because we have forgotten that the pandemic, the commodity shock, and the monetary tightening in the developed world have all basically derailed the growth path that many countries would have expected at the beginning of this decade,” Nageswaran said here in the Capital on November 1.

“In all these discussions on climate finance, we forget that ultimately economic growth is the most important insurance and source of resources for them to be able to invest in these longer-term considerations and priorities which are important for today's developed world because in Maslow's Hierarchy they have taken care of the initial existential needs, but many developing countries are not in that position,” he added.

India, which will be handed over the presidency of the G-20 in December from Indonesia, has been vocal about its position in the fight against climate change in international fora. While it is the third largest emitter of carbon dioxide, it has called for the use of per capita emissions as a more relevant measure. Further, it has called for greater climate financing from developed countries to help developing nations make the transition to cleaner growth.

In his address today, Nageswaran said that in addition to the quantum of climate finance – at the COP-26 conference held in Glasgow in late 2021, India had demanded $1 trillion – India’s climate agenda during its G-20 presidency would also include the availability of the said finance, the terms on which such finance is made available, and the disclosure standards.

Nageswaran argued that the current disclosure norms are so onerous that even well-funded, well-capitalised large corporate entities in developing countries could not meet them.

“Some of you might have read that several financial institutions have even left the GFANZ (Glasgow Financial Alliance for Net Zero) because the information requirements were very onerous. So you can imagine what would be the information requirements for developing countries and smaller businesses. And if that information is not provided, the flow of funds will be affected,” Nageswaran said.

The Glasgow Financial Alliance for Net Zero, or GFANZ, was launched in April 2021 and counts more than 550 financial institutions from over 50 countries among its members with the aim of shifting the world to net-zero greenhouse gas emissions. As per reports, several members including pension funds, investment consultant firms, have quit the alliance in recent months due to resource and data reporting challenges.​