Rising economy and population growth to increase demand for carbon-rich products in India
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New Delhi| India has rapidly increased its renewable energy capacity but its rapidly growing economy and ever-growing population will also increase demand for carbon-rich products. Global rating agency Moody’s expressed this apprehension on Thursday.
Moody’s Ratings said India will remain one of the fastest growing economies in the world with a gross domestic product (GDP) growth rate of 7.2 per cent in the year 2024 and 6.6 per cent in the year 2025. The country is likely to continue to have similar high growth rates over the next decade.
Moody’s, in its report titled ‘Carbon Shift-India’, claimed that increasing population and industrialization will also increase India’s energy needs. Apart from this, increasing the income of families will also increase the demand for fuel-rich products like vehicles. India’s share of global greenhouse gas (GHG) emissions was 6.7 percent in 2019 which increased to 7.5 percent in 2022.
The report says the government’s ability to attract private investment and deal with negative impacts such as job losses in infrastructure industries due to carbon cuts will determine whether India’s debt risks from carbon shifts and social risks outweigh them. No. India has committed to achieve net-zero emissions by the year 2070 and has also made some achievements towards the interim target of 2030. But the country’s rapidly growing economy will continue to increase greenhouse gas emissions.
Moody’s said India was the world’s third-largest greenhouse gas emitter as of 2022 but its per capita emissions are still low compared to other major economies. India has expanded its renewable energy capacity on the back of strong policy support and private sector investment. But the pace of carbon reduction in transportation and the broader economy has been slow. To accelerate this change, the government is planning to introduce a mandatory emissions trading system.
Moody’s says India has high credit risk for environmental risks such as rising temperatures, water-related problems and pollution. India is also highly vulnerable to social risks due to income inequality, health and safety concerns and limited access to basic services.
On the other hand, another rating agency S&P Global has claimed that India is moving towards becoming the third largest global economy by 2030. The agency said this in a report released on Thursday.
The agency said that increasing population highlights the increasing challenges in terms of expanding the scope of basic services and it is necessary to further increase investment to maintain productivity.
The report said emerging economies have big ambitions for the next decade and beyond. India, currently a $3,600 billion economy, aims to become a $30 thousand billion economy by 2047. India is currently the fifth largest economy in the world.
S&P said, “India is poised to become the fastest growing major economy in the next three years and will become the third largest globally by 2030. Its entry in 2024 into the ‘government emerging market bond index’ of investment banking company JP Morgan could provide additional government financing and access significant resources in domestic capital markets.”
S&P eyes future on its ‘emerging markets: a decisive decade, said in the ’ report that emerging markets will play a key role in shaping the global economy over the next decade. While the average growth rate of gross domestic product (GDP) will be 4.06 per cent by 2035, the rate for advanced economies will be 1.59 per cent.
By the year 2035, emerging markets will contribute about 65 per cent of global economic growth. Emerging economies in the Asia-Pacific region will mainly contribute to this growth. These include China, India, Vietnam and Philippines.
S&P said, “Moreover, by 2035 India will be established as the third largest economy in the world, while Indonesia and Brazil will be ranked eighth and ninth respectively.” India has also taken steps to improve its weak fiscal capacity by increasing its capital expenditure, which will further support long-term growth, it said.
