Economic Impact of India’s Transition to Net Zero

Abstract

India is one of the fastest developing countries in the world and the fourth largest global emitter (Bhattacharya 2022), as per its international alliances and treaties, it must reduce its emissions by a significant amount. Net zero emissions by 2070 is a target announced by the Indian government at UN Climate Summit COP26 on November 1, 2021. Since then, India has taken various steps through the introduction of vast policies to achieve the same. While encouraging the adoption of greener sources of energy and adoption of energy efficiency, India is also trying to reduce its emissions. In the short run, prices of commodities produced by industries dependent on the use of fossil fuels may rise and due to the high capital and operational cost, these industries might even close down completely. This would lead to a loss of employment and decreased economic activity. The economic effect of such policies is that in the long run, they would prove to be beneficial by cutting down costs to businesses and consumers and generating employment. Thus, driving up the GDP. Bhutan sets an example as the only developing country to reach carbon neutrality.