Purnamita Dasgupta and Girika Sharma presented a paper titled ” Climate Finance for Adaptation and Sustainable Development in India,” co-authored by both, at the 2nd Annual Conference on Public Finance and Policy held at Madras School of Economics, Chennai, with their presentation delivered virtually. The conference was held on March 7 and 8, 2024.
The paper presented an overview of climate finance, with a special focus on flows of finance for adaptation. A desk analysis of available studies and estimates on finance needs and flows from developed to developing countries, and the current scenario in terms of flows from various international and domestic sources was conducted. The findings established the lack of uniformity and incomparability across methods used to estimate finance needs and the insufficiency of current financial flows for enabling the required transition to a climate-resilient economy for India. Prioritisation of resource allocations that integrated adaptation with developmental outcomes could lead to a transition that was compatible with sustainable development. Subsequently, an empirical comparative analysis of adaptation expenditures and needs linked to the consequences of climatic events across states yielded some interesting insights on the relationships between these variables. Choosing health as an indicator of development, the empirical analysis established a positive relationship between disaster preparedness and achievement of good health outcomes, and between adaptation expenditures and reduction in mortality. However, across states planned budgetary allocations did not match with adaptation investment needs. The paper presented preliminary evidence on how developmental gaps correlated with fund flows and needs for adaptation. Methodological differences and lack of coordination across sectors, large gaps between needs and available fund flows in the aggregate, low budgetary flows to critical sectors such as health, and lack of flows from the private sector for adaptation were some of the most important challenges. The use of standardised frameworks to accurately assess cost-effectiveness and returns on adaptation investments could encourage private finance and remove uncertainties in the investment climate. The assessment reinforced the need for mobilisation and alignment of adaptation finance flows with developmental needs across states and sectors. Prioritisation of cross-sector actions to align sectoral budgetary allocations between key developmental and climate outcomes could be beneficial in pursuing transformation.