Content
- 1. This clean energy rise needs climate finance expansion
- 2. Urea shortfall is a demand issue
This clean energy rise needs climate finance expansion
India’s Renewable Energy Progress
- Capacity Growth: Added 24.5 GW of solar in 2024 → 3rd largest globally after China & US.
- Global Recognition: UN’s 2025 Climate Report highlights India, Brazil, China as leaders in scaling solar & wind.
- Employment Impact: Renewable sector employed >1 million (2023) → contributing 5% of GDP growth.
- Off-grid Solar: Created 80,000+ jobs (2021).
- International Role: Leadership in International Solar Alliance (ISA).
Relevance:
- GS III – Environment & Energy: India added 24.5 GW solar in 2024; leader in ISA; renewable sector employs >1 million.
- GS II – Governance & Diplomacy: Climate finance gap ($1.5–2.5 tn by 2030) requires public-private mechanisms; impacts India’s global climate leadership.
- GS III – Economy & Sustainable Development: Adequate climate finance → inclusive growth, GDP boost, and net-zero target by 2070.
Practice Question :
- Evaluate India’s renewable energy achievements in the context of global climate leadership. Critically analyse why expanding climate finance is essential to sustain this momentum. Suggest measures to bridge the finance gap.(250 Words)
The Critical Gap – Climate Finance
- Economic Potential: IRENA: 1.5°C pathway → India’s GDP growth 2.8% till 2050 (double G-20 avg).
- Finance Needs:
- Estimates: $1.5 trillion by 2030 (IRENA, external estimates).
- MoF: >$2.5 trillion by 2030 for national targets.
- Components: Expansion of renewables, grids, battery storage, hydrogen, sustainable transport & agriculture.
- Current Status: Well below requirement despite strong renewable growth.
Climate Finance Trends in India
- Green, Social, Sustainability, and Sustainability-linked debt Issuance: $55.9 bn by Dec 2024 (+186% since 2021).
- Green Bonds: 83% share; crossed $45 bn in 2025.
- Private Sector Role: 84% of issuance led by corporates.
- Gaps: Limited access for MSMEs, agri-tech, Tier-II/III infrastructure.
- Policy Successes: Solar Park Scheme auctions, sovereign green bonds, SEBI’s social bonds.
Strategic Shifts Needed
- Public Finance Leverage: Budget allocations, fiscal tools to de-risk investments.
- Blended Finance: Concessional finance + risk-sharing (partial guarantees, subordinated debt, loan guarantees).
- Institutional Capital: Mobilise EPFO, LIC, pension & insurance funds → require regulatory reforms & ESG frameworks.
- Carbon Markets: New Carbon Credit Trading Scheme → opportunity if transparent, equitable & regulated.
- Innovations: Blockchain for climate finance tracking, AI-driven risk assessment, India-specific blended finance models.
Broader Implications
- Adaptation & Loss/Damage: Beyond mitigation → urgent need for financing resilience.
- Inclusive Growth: Climate finance must reach MSMEs, farmers, Tier-II/III cities → not only corporates.
- Global Positioning: India’s leadership must extend from clean energy deployment to financing innovation.
- Sustainability Pathway: Consistent finance is key for India’s net zero target (2070) & SDGs.
- Soft Power & Diplomacy: Climate leadership reinforces India’s voice in G-20, COP negotiations, South-South cooperation.
Urea shortfall is a demand issue
Basics – What is Happening
- Current Issue: Farmers in several States, especially Telangana, standing in long queues for urea fertiliser.
- Immediate Cause: Sudden surge in paddy cultivation due to good monsoon and area expansion.
- Underlying Problem: Structural demand driven by crop pricing policies, not just distribution inefficiency.
- Urea Consumption: India consumes over 21 million tonnes annually (2023–24), second largest globally; high concentration in paddy-dominant states (Punjab, Haryana, Telangana, Andhra Pradesh, Tamil Nadu).
Relevance :
- GS III – Agriculture & Environment: High urea use due to MSP-favoured paddy; environmental issues include soil nutrient imbalance, water pollution, nitrous oxide emissions.
- GS II – Governance & Policy: Structural policy flaw in MSP & procurement system → overuse of fertilizer; need for crop diversification and rationalized subsidy policy.
- GS III – Economy: Resource misallocation and dependency on nitrogenous fertilizer; reform needed for sustainable agricultural growth.
Practice Question :
- Critically examine the factors behind India’s urea shortage in 2023–24. Analyse how Minimum Support Price (MSP) policy shapes fertilizer demand and discuss measures to reduce environmental and economic costs associated with excessive urea use.(250 Words)
Historical Context
- Pre-Green Revolution (before mid-1960s): Fertilizer use < 2 kg/ha; mainly organic manures.
- Post-Green Revolution: Introduction of high-yielding varieties of wheat and paddy, assured irrigation, and fertilizer subsidies → explosive increase in urea use.
- Consumption Growth:
- 1970s: < 2 mt
- 2010–11: >16 mt
- 2023–24: >21 mt
Crop-Specific Fertilizer Dynamics
- Paddy vs Other Crops:
- Paddy: 150–200 kg urea/ha; highly fertilizer-intensive.
- Wheat: Moderate; Pulses, oilseeds, coarse cereals: 30–40 kg/ha.
- State Patterns: Telangana and Chhattisgarh saw rapid paddy expansion → spike in urea demand.
- MSP Effect: Price support and assured procurement favour paddy and wheat → farmers grow these over less-supported crops.
- Policy Distortion:
- Paddy grown in traditionally non-paddy regions (Punjab, Telangana).
- Leads to overuse of urea as farmers chase higher yields for assured returns.
Economic and Environmental Implications
- Farmer Behavior: Excessive use often intentional; low nitrogen efficiency (30–35%). Policy incentives drive behavior rather than ignorance.
- Soil Health: Continuous N-fertilizer without adequate P, K, and organic inputs → nutrient imbalance, micro-nutrient deficiencies.
- Water & Ecosystem: Nitrogen runoff → groundwater nitrate contamination, eutrophication in water bodies.
- Climate Impact: Nitrous oxide emissions from over-fertilized fields → ~300× more potent than CO₂.
Root Cause Analysis
- Structural Policy Issue: MSP and procurement systems bias towards paddy → creates long-term high urea demand.
- Past Policy Interventions: Awareness campaigns, soil health cards, balanced fertilization initiatives → limited impact.
- Recommended Reforms:
- Diversify crop procurement policies beyond paddy/wheat.
- Extend real price support to pulses, oilseeds, millets.
- Rationalise fertilizer subsidy policies to encourage balanced use.
- Conclusion: The urea shortage and excessive use are symptoms of flawed crop pricing policy, not just supply-chain inefficiency or farmer negligence.
Comprehensive Takeaways
- Policy-Driven Demand: Fertilizer use follows MSP incentives → structural, predictable pattern.
- Environmental Costs: Soil degradation, water pollution, GHG emissions → long-term ecological risk.
- Economic Costs: Misallocation of resources toward high-MSP crops; dependency on nitrogen fertilizers.
- Solution Path: Crop diversification, balanced fertilizer promotion, price support for less-favored crops.
- Systemic Lesson: Urea queues reflect deeper agricultural policy failure, not just logistics or farmer behavior.
