Economists and finance experts have sought higher weightage in the Finance Commission for states that are vulnerable to climate change.
The Finance Commission should consider climate change threat as a criterion, while allocating funds to states, they said. Besides, the whole climate change debate should be made more relevant for financial policy-makers, experts said on at a roundtable meeting jointly organised by the Department of Economic Affairs (Finance Ministry) and Centre for Development Economics (Delhi School of Economics).
Shreekant Gupta of Delhi School of Economics said “the Finance Commission gives weightage to less developed states while allocating funds. They should include the climate criteria as well.”
Participants at the roundtable, including RBI Deputy Governor Subir Gokarn and Chief Economic Advisor Kaushik Basu, agreed though all countries are affected by climate change, the extent of impact varies.
Because of their stronger dependence on agriculture and limited resources, developing countries would be hit badly, according to Partha Sen of DSE.
Gokarn, who made a presentation on ‘Why central bank should care about climate change’, said the discussions should be made more relevant for policy makers. “From policy perspective, immediacy is a critical attribute. We make decisions when the costs and the benefits are immediate. It is very difficult to make a decision when cost and benefits are very far in future,” he said. From policy perspective, one has to break down the phenomenon of climate change, from discontinuous into a more continuous one, according to him.
This meeting assumes importance, as it provided a platform for the academicians, policy makers and economists to understand the importance of climate change and its economic implications.
The round table focused on the need for shaping policies in a manner such that India’s economic growth is climate-resilient, inclusive and low carbon in nature.
It elaborated on the medium and long-term implications of climate change for the economy especially with regard to macroeconomic variables.
On the proposed goods and services tax (GST), D K Srivastava, director of Madras School of Economics, said it would be “climate un-friendly.” Once implemented, GST would do away with the cess imposed on sectors like coal, he explained.
