Report on Currency & Finance 2022-23 by RBI

• The Reserve Bank of India’s (RBI) Department of Economic and Policy Research (DEPR) released a Report on Currency & Finance 2022-23.
• It is an annual publication of the RBI.The report covers various aspects of the Indian economy and financial system.
• The theme of Report on Currency and Finance 2022–23 is ‘Towards a Greener Cleaner India’.

Dimensions

• The report covers four major dimensions of climate change to assess future challenges to sustainable high growth in India,
•  The unprecedented scale and pace of climate change;
•  Its macroeconomic effects;
•  Implications for financial stability and
•  Policy options to mitigate climate risks

Major Findings

• The cumulative total expenditure for adapting to climate change in India is estimated to reach 85.6 lakh crore (at 2011-12 prices) by 2030.
• India’s goal of achieving the net zero target by 2070 would require an accelerated reduction in the energy intensity of GDP by about 5% annually and a significant improvement in its energy mix in favour of renewables to about 80% by 2070-71.
• India’s green financing requirement is estimated to be at least 2.5% of GDP annually till 2030 to address the infrastructure gap caused by climate events.
• Public Sector Banks are more prone to climate risks than their private sector counterparts and may face capital shortfalls. Globally, however, the measurement of climate-related financial risks remains a work in progress.
•  CBDCs can be more energy efficient than much of the current payment landscape, including credit and debit cards.The CBDC helps curb emissions by nullifying operations such as printing, storage, transportation, and replacement of physical currency.

Policy Options to Mitigate Climate Risks

• Fiscal Policy Initiatives: Carbon pricing using carbon taxes, Emission Trading System; green taxonomy to identify sustainable green assets and activities etc.
• Technology adoption: targeted R&D investments by Governments; addressing variability in wind and solar power supply, developing an indigenous renewables supply chain etc.
• Monetary Policy: Higher use of Central Bank Digital Currency (CBDCs) can help lower carbon footprint, lower margin requirements for SGBs when used as collateral etc.

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