Enhancing India’s Readiness to Climate Finance

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Enhancing India’s readiness to access and deliver international climate finance Develop and introduce standardised methodologies and key performance indicators (KPIs) for measuring and reporting on mitigation and adaptation projects/programmes. Introduce regular reporting requirements (along with appropriate communication channels) for DFIs, NIEs and other project implementing actors (e.g. NGOs or the private sector) to report on project-level KPIs. Build capacity within DFIs to measure and report on the KPIs of climate-related programmes. National-level MRV: Work with the Ministry of Finance to develop a series of classifications/codes that can track national budgetary expenditure on climate-related activities (including National Missions, programmes projects with climate co-benefits, etc.) in India. Undertake an initial baseline of climate finance spending from budgetary sources, using a CPEIR-type methodology. Collect data from international donors (both bilateral and multilateral) on their climate-related expenditure in India. This data should include a number of different indicators in addition to volume of finance – including sectoral/thematic focus, geographic location, targeted impact, etc. Introduce non-mandatory reporting channels for private sector, NGOs, thinktanks, research institutions, universities, charitable foundations, and other civil society actors to report on climate-related expenditure (in line with KPIs collected at the project-level). Provide training and capacity support to the Ministry of finance, other line Ministries, private sector actors, civil society, etc. for the implementation of new MRV requirements. Data processing and reporting: Develop a database to collect data from each of the two MRV streams. Process national-level data to determine if headline values meet the expected resource allocation strategy to implement the NAPCC. Process project-level data to determine the effectiveness of climate finance spending at the sub-national level. Where particular strengths or gaps in the effectiveness of climate finance are highlighted, liaise with relevant line Ministries, policy planners, etc. to develop an action plan that responds to challenges and scales-up successes. Develop regular reporting channels and templates to report on data collected under the MRV system. Provide input and expert advice to the PMO Council, Planning Commission, the Ministry of Finance, other line Ministries, National Missions, etc. when developing important national plans (e.g. 5-year plans) that have a climate change/climate finance component. 7.2 The future climate finance delivery structure in India If India follows the recommendations of this report to address its seven readiness gaps, the institutional structure for accessing and delivering climate finance would look different than it does today (see Figure 3.1 in Chapter 3.1). Figure 7.1 provides an overview of how the new institutional structure would look if India followed all the recommendations above. In particular, it highlights how the new climate finance coordinating agency would manage the overall national climate finance response – providing overall direction to accessing climate finance; coordinating a needs assessment and cost benefit analysis to prioritise interventions; and directing the delivery of climate finance in line with the NAPCC, SAPCCs, and other national development plans (Recommendations #1 and #2). The Figure also highlights a number of other points from the recommendations section. It outlines how climate finance delivery bodies (particularly DFIs) will have increased capacity to deliver climate finance in a coordinated way under the NAPCC Missions and SAPCCs, and to develop bankable Ref: Ricardo-AEA/R/ED59216/Final Report 55
Enhancing India’s readiness to access and deliver international climate finance projects with implementing and executing bodies (Recommendations #4 and #5). At all levels of the delivery and implementation process, there will be an important role for the private sector to play (Recommendation #3). The coordinating agency would have to scale up the role of the private sector by involving them more proactively in environment-related strategies, funding streams, and implementation plans in India. An underlying feature of this new coordinated delivery structure is that DFIs will have greater ability to access funds directly from international sources. This would start with capacity building support to improve fiduciary standards, project management and environmental & social safeguards, which the coordinating agency could make available as an early priority of its operations (Recommendation #6). This would ensure that DFIs can not only act as NIEs under the GCF but would also be able to attract funds from other sources. Finally, the Figure highlights the importance of conducting MRV of climate finance, at both the national level and project level (Recommendation #7). This data can be collected by the central coordinating agency, and then analysed and processed to help guide the agency in improving future climate finance strategy in India. Figure 7.1: The future climate finance delivery structure in India Ref: Ricardo-AEA/R/ED59216/Final Report 56
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STRENGTHS Enhancing India’s readi
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Enhancing India’s Readiness to Climate Finance

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