The New Climate Economy has officially launched a case study, India: Pathway to Sustaining Rapid Development in a New Climate Economy (Conference Draft). The study argues that India’s efforts to achieve rapid, inclusive and sustainable development have been hampered in the past by pervasive inefficiencies that arise from market, policy and institutional failures and weaknesses. Drawing on the framework developed in the recent New Climate Economy report, Better Growth, Better Climate, the paper focuses on three critical socio-economic systems where increased efficiency, investment and innovation can yield major development and environmental benefits: energy systems, agriculture and land use, and cities. The transport sector will play a key role in improving energy efficiency and facilitate the development of compact, efficient cities in India. 

India’s urban population almost doubled from 222 million in 1990 to an estimated 410 million in 2014 and is expected to reach 800 million by 2050. Cities now contribute over two-thirds of GDP, bring in over 90% of government revenue and contribute the majority of jobs. But the pattern of urbanization is also one rife with numerous stresses and dysfunctions: rapidly expanding peri-urban sprawl, inadequate and unreliable urban infrastructure, high land prices, proliferating slums, growing congestion and travel times, reduced agglomeration economies, intense local air pollution and rising GHG emissions.

The transport sector’s demand for energy is among the fastest-growing sources of energy demand in India but has not received much attention in the country’s efforts to improve energy efficiency. Energy demand in the transport sector can be viewed as the product of three factors: total transport activity (measured in, say, passenger-kms), the shares of various transport modes (e.g. public transportation, cars, trucks etc.), and the energy used per passenger-km for each transport mode. The first two of these relate closely to the structure of cities. Reform of fuel subsidies will clearly be important to encourage more efficient energy use in transport. Fuel efficiency standards for new cars have been proposed by the Bureau of Energy Efficiency, but no action has so far been taken. The prompt introduction of such standards would be an important step towards better management of energy demand in the transport sector, subject to the concerns about higher vehicle prices, as already noted for appliances.

Proposals to build more compact cities are countered by concerns that greater densities in urban cores would overwhelm the rickety and inadequate existing infrastructure of urban areas in terms of water supply, sewerage and sanitation, access to electricity and public transport. A vast upgrading in the scale and quality of urban infrastructure is needed if India is to fully tap the potential of its cities. The government’s intention to massively expand urban investment on “smart cities” provides a tremendous opportunity to simultaneously tackle these interlinked issues.

The case study highlights eleven policy recommendations that can significantly increase the pace of improvement in the well-being of the population of India while also better tackling environmental and climate risks. The political economy of such reforms is often difficult but experience from both India and other countries provides considerable hope that meaningful progress is possible. 

Full text of the report is available in here.