Ranchi, Aug 25: Jharkhand is considering a green budgeting framework that would bring climate action, environmental protection and the concerns of coal-dependent communities into the state’s financial planning and public investment decisions.The proposed framework has been outlined in a report prepared by the Institute for Energy Economics and Financial Analysis (IEEFA) in collaboration with the Jharkhand government’s Task Force on Sustainable Just Transition.
The initiative aims to help the state identify and track government expenditure that contributes to climate and environmental objectives, while also examining spending that may have negative environmental consequences.The proposed system focuses on six broad areas — reducing greenhouse gas emissions, strengthening climate resilience, protecting natural resources, improving resource efficiency and recycling, promoting sustainable urban development and mobility, and supporting a fair transition in coal-dependent districts.
A key feature of the framework is a budget-tagging system. Instead of simply categorising expenditure as environmentally friendly or otherwise, government spending would be placed into different groups according to its environmental relevance.
The proposed categories include spending with a positive environmental impact, expenditure that supports economic transition, spending that strengthens systems and institutions, neutral expenditure, and spending with potentially negative environmental consequences.
The framework also proposes a separate Just Transition marker for expenditure aimed at supporting coal-producing districts, workers and communities that could be affected by changes in the fossil-fuel-based economy.
The report recommends that Jharkhand introduce the system gradually. The initial phase could involve pilot exercises in departments such as energy, agriculture, rural development and forests.The state could then prepare an annual green budget statement alongside its regular budget, allowing policymakers and the public to understand how government expenditure relates to environmental and climate objectives.
The proposed framework also calls for a dedicated green budgeting cell within the Department of Finance. The cell could coordinate with government departments, the Task Force on Sustainable Just Transition and independent experts to improve the classification, monitoring and evaluation of expenditure.
A digital green budget portal has also been proposed to make relevant data, methodologies and classifications accessible to the public.According to the report, the long-term objective should be to integrate green budgeting into medium-term expenditure planning, public investment decisions and policy evaluation rather than treating it merely as a reporting mechanism.
The framework could eventually be extended beyond conventional state budget expenditure to include resources such as District Mineral Foundation funds and other extra-budgetary sources.The proposal comes at a time when Jharkhand faces the dual challenge of protecting its natural resources while managing its economic dependence on coal and mining.
A planned transition could help affected regions diversify their economies and provide workers with alternative livelihood opportunities.The report also recommends aligning the proposed state framework with India’s emerging climate finance classification system.
Such alignment could improve consistency between state and national approaches to climate-related public finance.If implemented effectively, green budgeting could provide Jharkhand with a structured way to assess the environmental, economic and social implications of public spending and support a more resilient and inclusive development strategy.
The initiative could also position Jharkhand among Indian states experimenting with stronger links between public financial management, climate policy and Just Transition planning.
