Ranchi, Aug 26: Adopting a green budgeting framework could help Jharkhand make its public expenditure more environmentally sustainable while supporting climate action and protecting the livelihoods of communities dependent on fossil-fuel industries, according to a report by the Institute for Energy Economics and Financial Analysis (IEEFA).
The report, titled “A Green Budgeting Framework for Jharkhand,” proposes a roadmap for incorporating climate and environmental considerations into the state’s regular financial planning and budgetary decisions.
Jharkhand, a major coal-producing state with significant mining and industrial activity, faces the challenge of balancing economic development with environmental protection and the transition towards a cleaner economy.
The proposed framework focuses on six broad areas — climate mitigation, climate adaptation and resilience, protection of natural resources, resource efficiency and circular economy, sustainable mobility and urban development, and a Just Transition with a particular focus on coal-producing districts.
Under the proposed system, government expenditure would not simply be divided into “green” and “non-green” categories. Instead, spending would be assessed through five classifications based on its environmental relevance — green positive, transition enabling, systemic, neutral, and brown or negative.
Such a classification could provide policymakers with a clearer understanding of how different government programmes and investments contribute to environmental and climate objectives.Gaurav Upadhyay, Lead Energy Finance Specialist for India Just Transition at IEEFA and co-author of the report, said green budgeting could help integrate climate and environmental considerations into routine fiscal decision-making rather than treating them as a separate area of expenditure.
The report recommends a phased implementation process, allowing the state to strengthen institutional capacity, improve data collection and gradually refine the methodology used to assess budgetary spending.
Ajay Kumar Rastogi, Chairperson of the Jharkhand government’s Task Force on Sustainable Just Transition, said such a framework could improve the quality, resilience and long-term sustainability of public expenditure.It could also help the state manage the economic and fiscal challenges associated with environmental changes while promoting inclusive growth and protecting livelihoods, he said.
IEEFA South Asia Director Vibhuti Garg noted that India has taken steps over the past decade to incorporate climate and environmental considerations into public finance.Bihar, Odisha and Assam have already adopted green budgeting initiatives, and a similar approach in Jharkhand could help the state align its annual expenditure more closely with broader climate and sustainability objectives.
For Jharkhand, the framework is particularly relevant to coal-producing districts, where any long-term shift away from fossil fuels could have significant economic and social consequences.
A focus on Just Transition could help these regions prepare for economic diversification while supporting workers and communities dependent on coal-related activities.
The proposed approach, IEEFA said, could enable Jharkhand to pursue environmental sustainability while ensuring that climate-related policy changes remain inclusive and sensitive to the state’s economic realities.
