Climate Change-responsive Public Expenditure in India: An Empirical Analysis

The paper examines the links between national plan on climate change and the fiscal stance across sectors in the context of Union government in India, against the analytical backdrop of environmental federalism. We have mapped the National Action Plan on Climate Change in India to the Demand for Grants across all the ministries and departments to arrive at an estimate for the public expenditure on adaptation, mitigation and regulatory spending relate to climate change. The mapping of National Action Plan on Climate Change to the budgetary allocations across sectors undertaken in this paper is illustrative and openended. Given the data constraints, we identified that specifically targeted expenditure on climate change related programmes is around 5-6 per cent of GDP in the national budgets. However, there is significant deviation between the budget estimates and the actual spending. The fiscal slippage is analyzed to understand the Climate Change budget credibility. The sustainability of the link between fiscal stance and climate change depends on integrating budget codes in the classification of budgetary transactions, through a clear road map by the Ministry of Finance. As such, the financing of climate change is highly fragmented in India at sectoral levels and calls for a macroeconomic policy framework.