India could gain $11 trn in 50 years with climate action: Deloitte report

Unmitigated climate change can cost India $35 trillion in economic potential over the next 50 years. Therefore, India must act now to avoid the losses, according to the latest Deloitte Economics Institute. The report, titled, “India’s turning point: How climate action can drive our economic future”, also reveals how the country could instead gain $11 trillion in economic value over the same period.

Deloitte’s report comes against the backdrop of the IPCC (Intergovernmental Panel on Climate Change) report that flags serious concerns related to climate change and its catastrophic impact on the world due to rising temperature. Glacial retreat in the Hindu Kush Himalayas; compounding effects of sea-level rise and intense tropical cyclones leading to flooding; an erratic monsoon; and intense heat stress are likely to impact India in recent years, indicated the IPCC report released earlier this month.

According to Atul Dhawan, Chairperson, Deloitte India, India has a narrow window time — the next 10 years — to make the decisions needed to alter the trajectory of climate change. No one is immune to the impact of climate change but for India, points out Dhawan, this is a window of opportunity to “lead the way and show how climate action is not a narrative of cost but one of sustainable economic growth.” As India aspires to be a $5 trillion economy, it is not just foreign and domestic investments that will be the key in driving growth, the country must also take this opportunity to align its ambitions with climate choices, he says.

With no action taken on climate change, the average global temperatures could rise by 3°C or more by the end of this century. This will make it harder for people to live and work, as sea levels rise, crop yields fall, infrastructure is damaged, and other challenges emerge, threatening the progress and prosperity that the nation has enjoyed in recent decades.

Over the next 50 years, the top five most impacted industries in terms of economic activity are expected to incur a significant share of climate-related loss, says the report. These industries —services (government and private), manufacturing, retail and tourism, construction, and transport — currently account for more than 80 percent of India’s GDP. Together, they form the basis of the country’s contemporary economic engine. Deloitte estimates that by 2070, these five industries alone would experience an annual loss in the value added to GDP of more than US$1.5 trillion per year.

Deloitte’s research also shows that if governments, businesses, and communities act boldly and rapidly in the next decade to address climate change, average global temperature rises can be limited to around 1.5°C by 2050 – a scenario that will minimize the impact of climate change for India and the rest of the world. At the same time, India can achieve significant economic growth by supplying the products, services, and financing the world will need to limit temperature increases.

India is home to many enterprises that are already world-leading producers of the advanced solutions countries will need to address climate change. These include green hydrogen and negative-emission solutions, both natural and technological.

Viral Thakker, Partner and Sustainability Leader, Deloitte India, says as the world’s economies transform towards new, low-emission pathways, India is well positioned to play a leading role in this process globally. “By making the right choices now, India could chart a more prosperous path towards a low-emission future, accelerating progress in the rest of the world by exporting key technologies, processes, and know-how,” says Thakker.

As a developing nation, India’s transformation to a low-emission footing is likely to be more complex and challenging than much of the rest of Asia Pacific. It will have to strike a delicate balance between the need for sustained economic development— and the corresponding rise in energy demand — and investing in and transitioning to emerging, low-emission technologies. The structural adjustment costs associated with reducing India’s emissions profile are expected to be significant, but the cost of inaction will be greater.