Sustainable development: What will it take for India to meet the SDG goals

With just six years remaining, the current progress for most developing countries falls short of what is required to meet the sustainable development goals (SDGs). Not a single one of the 17 goals is on track to be achieved by the 2030 deadline. In this context, Union Finance Minister Nirmala Sitharaman did well to raise the issue of the SDG-financing gap faced by developing countries at the recently held “Voice of Global South Summit”. At this juncture, the economic transitions needed to attain the SDGs require investment, public and private, at an accelerated pace. Yet, investment is failing to reach where it is needed most. Financing for SDGs continues to be predominantly delivered as loans, a large share of which is non-concessional, adding to existing debt pressures. For instance, 60 per cent of low-income countries spend each year around five times more on debt servicing than on climate adaptation.

The 2024 Financing for Sustainable Development Report (FSDR) of the United Nations estimated that developing countries needed approximately $4 trillion additionally in annual investment to achieve the SDGs. More than half the gap, or around $2.2 trillion, relates to energy transition alone. This includes investment in renewables, energy efficiency, and other transition-related technologies — covering not only SDG 7 (affordable and clean energy) but also SDG 13 (climate action). Sizeable capital expenditure is required also in water, sanitation, and infrastructure. This comes despite developed countries being able to meet their climate-finance target for the first time in 2022, raising $115.9 billion for the developing countries. However, the amount raised is not enough for countries to meet their nationally determined contributions (NDCs).

India is making good progress on its climate agenda. The decision to roll out the carbon-credit-trading scheme by 2026, along with increasing solar and wind capacity and stepping up hydrogen production, is a step in the right direction. Green-bond issuance is gradually gaining pace, which should help the country’s energy sector transition away from fossil fuels and reduce its emission intensity. Nonetheless, according to the International Monetary Fund’s latest country report, India’s investment needs to meet its climate-change adaptation, and mitigation targets are sizable, estimated at 4-8 per cent of gross domestic product per year. Given that a large part of the investment will need to be made by the government, significant fiscal reorientation would be required.

In its SDG India Index report, the NITI Aayog recently noted India had made progress, obtaining a score of 71 in 2023-24, up from 66 in 2020-21 and 57 in 2018. Yet, India’s performance remains mixed. Relative to 2018, remarkable improvement was seen in good health and wellbeing (goal 3), affordable and clean energy (goal 7), and sustainable cities and communities (goal 11) in 2023-24. In contrast, the country witnessed a reversal in progress in reduced inequalities (goal 10) and life on land (goal 15). To meet some of these goals, the government will need to extend the coverage of social-safety nets. A lot will thus depend on how government spending is directed towards developmental goals. Given the current level of public debt and deficit, India’s public finances will need deft management both at the Union and state levels.