Earlier this year, India surpassed France to become the sixth largest economy of the world. It is also one of the world’s fastest-growing economies, poised to become the third-largest by 2028. Rapid economic growth is often driven by an increase in energy demand and consequently higher carbon dioxide emissions. In the lead-up to the Paris Agreement on climate change, India committed to cutting its emissions intensity of GDP by 33% to 35% below 2005 levels by 2030, and to achieving 40% of its electricity-generation capacity from non-fossil sources by the same year. Structural reforms are now needed to facilitate India’s decarbonisation, similar to structural reforms that are critical for achieving higher and equitable economic growth. Four structural reforms hold the key. First, India’s electricity pricing policy needs to be significantly overhauled. Second, revamping the market design of India’s electricity sector is a must. Third, banking sector reforms are pivotal for meeting India’s ambitious renewable energy goals. Finally, India’s bond market needs to take off.

(Live Mint)