Sustainable Development: Green finance, EIA and farming

In February 2023 SEBI widened the definition of green debt securities for listed non-convertible issues and added three named sub-categories. Blue bonds fund water management and marine-sector projects, yellow bonds fund solar energy generation and related value chains, and transition bonds fund an issuer's shift towards a less carbon- intensive path, in line with India's climate commitments. SEBI also issued 'dos and don'ts' to curb greenwashing, such as not using misleading labels or overstating benefits. There is no 'coal-capacity bond' category, since raising money to add coal capacity runs against the very idea of green debt. So three of the four items are recognised.

MoSPI set up the expert group in August 2011 under Sir Partha Dasgupta, Frank Ramsey Professor Emeritus at Cambridge, to advise on compiling green national accounts. Its 2013 report recommended building accounts on the SEEA in phases: first asset accounts, then physical flows and finally monetary flows, which is the path MoSPI's EnviStats accounts have followed since 2018. Dasgupta later wrote 'The Economics of Biodiversity' (the Dasgupta Review, February 2021) for the UK Treasury, which argues for measuring inclusive wealth, including natural capital, alongside GDP.

Climate and green budgeting in India has grown from the States. Odisha brought out its Climate Budget for 2020-21, prepared with its Climate Change Cell, tagging departmental schemes by their relevance to mitigation and adaptation. Bihar began a 'Harit Budget' (green budget) from 2020-21, with technical support from TERI, identifying green spending across departments. Other States have since adopted similar frameworks. All these are executive initiatives: the FRBM Act, 2003 is a Union law on deficits and debt and has no green-budget requirement, and States have their own fiscal responsibility laws, none of which imposes a uniform green chapter. Statements 1 and 2 are correct.

Under the ICMA principles, a green bond is a 'use-of-proceeds' instrument: the money must go to eligible green projects and be tracked and reported. A sustainability-linked bond is 'performance-based': the issuer may use the money for general corporate purposes, but commits to key performance indicators and sustainability performance targets, for example cutting emissions intensity by a given date. If a target is missed, a financial feature changes, most often a coupon step-up. Option (b) describes a sustainability bond, which funds a mix of green and social projects. Sustainability-linked bonds suit issuers with few separate green projects but with credible company-wide targets.

The Paris Collaborative on Green Budgeting was launched by the OECD at the One Planet Summit in Paris on 12 December 2017 to help governments align budgets with climate and environmental goals. Its central tool is budget tagging: each spending or tax line is examined and marked as favourable, unfavourable, neutral or mixed for objectives such as mitigation, adaptation, biodiversity or pollution. Tagging makes environmentally harmful items, such as fossil-fuel subsidies, visible alongside green spending, so trade-offs are clear in budget decisions. It changes the information available within the normal budget process; it does not ring-fence money or move responsibility to another ministry.

The RBI issued the green deposits framework on 11 April 2023, effective from 1 June 2023. It covers scheduled commercial banks, including small finance banks, and deposit- taking NBFCs and housing finance companies, but it excludes Regional Rural Banks, Local Area Banks and Payments Banks. Payments banks cannot lend at all, so they cannot channel deposits into green activities. Entities need a board-approved policy and a financing framework listing eligible activities such as renewable energy and clean transport. Allocation must undergo annual third-party verification, and impact assessment became mandatory from FY 2024-25. Statements 1 and 3 are correct.

The Ministry of Finance issued the Framework for Sovereign Green Bonds on 9 November 2022 ahead of the first issue in January 2023. Project selection is handled by a Green Finance Working Committee chaired by the Chief Economic Adviser, with members from line ministries. The framework has an exclusion list that rules out nuclear power generation, direct waste incineration, alcohol, weapons, tobacco, gaming, palm oil, landfill projects and hydropower plants larger than 25 MW, in line with international green-bond practice that is cautious about large dams and nuclear power. CICERO rated the framework 'Medium Green' with 'Good' governance. Statements 1 and 3 are correct.

The idea was set out by David Pearce in 1991 in the context of carbon taxes. A Pigouvian tax on pollution gives the first dividend by making polluters pay for the external damage. If the revenue is used to lower existing taxes that distort behaviour, such as income or payroll taxes that discourage work, the economy may gain a second, efficiency dividend. Later work, notably by Lawrence Goulder (1995), separated a 'weak' version (recycling revenue into tax cuts beats returning it as lump sums, which is broadly accepted) from a 'strong' version (the swap is costless or beneficial even before environmental gains), which is much more contested because environmental taxes can interact with existing tax distortions.

Both II and III are correct and both explain Statement I (a). Article 6 of the Paris Agreement lets countries work together to meet their targets. Statement II is right: Articles 6.2 and 6.4 set up carbon markets, for trading credits between countries and through a UN-run mechanism. Statement III is right: Article 6.8 covers non-market approaches, such as joint finance, technology and capacity building. Both halves are why it is discussed so much, so options (b), (c) and (d) fail.

Notice the progress: rules for Article 6 carbon markets were finally agreed at COP29 in Baku (2024). India's own Carbon Credit Trading Scheme (2023) builds a domestic market, and India has signed Article 6.2 deals, such as with Japan.

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PAGE emerged from Rio+20 (b). At the UN Conference on Sustainable Development (Rio+20) in Rio de Janeiro, 2012, the outcome document "The Future We Want" backed the green economy as a tool for sustainable development and poverty eradication. In response, PAGE was launched in 2013 to help countries shape green economy policies. Five UN agencies run it together: UNEP, ILO, UNDP, UNIDO and UNITAR. Johannesburg 2002 (a) was the World Summit on Sustainable Development. Paris 2015 (c) produced the Paris Agreement. The New Delhi summit (d) is TERI's annual event.

Rio+20 also started the process that produced the SDGs (2015). Notice the follow-up: India is not a PAGE partner country, but the idea links to its LiFE mission.

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Statements 1 and 2 are correct (a). The Global Climate Change Alliance was started by the European Union in 2007 (1) and became GCCA+ in 2014. It gives technical and financial support to poor, climate-exposed countries, mainly small island states (SIDS) and least developed countries (LDCs). The aim is to help them build climate change into their development policies and budgets (2), with a focus on adaptation and disaster risk reduction. Statement 3 is wrong because WRI and WBCSD run the GHG Protocol, not the GCCA.

Notice the trap: UPSC mixes up who runs which climate body. Remember these pairs: GCCA belongs to the EU, the CCAC to UNEP with partner countries, REDD+ to the UN or World Bank, and the GHG Protocol to WRI and WBCSD.

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Intended Nationally Determined Contributions were climate pledges countries set for themselves before the Paris Agreement (2015), so the term relates to combating climate change (b). Once a country ratified the Agreement, its INDC became its NDC. The term has nothing to do with refugee pledges (a), AIIB capital (c) or the SDGs (d).

India pledged to cut emissions intensity of GDP by 33–35% from 2005 levels by 2030, and raised this to 45% in 2022, along with 50% of power capacity from non-fossil sources by 2030 and net zero by 2070. Notice how Paris replaced top-down targets with nationally decided ones.

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Only statement 1 is correct (a). Agenda 21 is a non-binding, global action plan for sustainable development in the 21st century. Statement 2 is wrong because it was adopted at the Rio Earth Summit (UNCED), 1992, not at Johannesburg. The World Summit on Sustainable Development, Johannesburg 2002 (Rio+10) only reviewed how it was being carried out. Rio also produced the UNFCCC, the CBD, the Rio Declaration and the Forest Principles.

Its local version, Local Agenda 21, asked city governments to make their own plans. Notice the order of events: Stockholm 1972, Rio 1992, Johannesburg 2002, Rio+20 2012 ("The Future We Want"), and then the SDGs/Agenda 2030 in 2015, which carry Agenda 21's ideas forward.

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Only statement 2 is correct (b). The SDGs were proposed at Rio+20 (2012), with Colombia and Guatemala pushing the idea. The UN adopted them in September 2015 as Agenda 2030: 17 goals and 169 targets to be met by 2030 (2). They replaced the eight MDGs (2000–2015). Statement 1 is wrong because the Club of Rome's 1972 report The Limits to Growth warned about resource limits but never proposed the SDGs.

In India, NITI Aayog tracks progress through its SDG India Index, and Kerala and Uttarakhand usually rank at the top. Notice the related term sustainable development, made popular by the Brundtland Report, Our Common Future (1987): meeting today's needs without harming future generations.

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