Greening India’s Recovery Package - Ideas for Consideration

This report summarizes discussions on the Government of India's economic recovery package announced in response to the COVID-19 pandemic. It analyzes the package's composition, its focus on supply-side measures, and provides specific recommendations for 'greening' the stimulus to align economic recovery with environmental sustainability and climate goals.

• The Government of India announced an economic recovery package totaling approximately INR 20.90 lakh crore (about $0.29 trillion), consisting of expansionary fiscal measures (~13 lakh crore) and monetary stimulus (~8 lakh crore). While the package is presented as 10% of GDP, the actual fiscal cost is approximately 1.2% of GDP, with the effective fiscal stimulus in terms of extra spending being INR 1.76 trillion, or 0.8% of GDP.
• The stimulus package is primarily focused on supply-side issues, with limited demand-side measures. Fiscal stimulus is distributed with 36% directed at relief measures (free food grains, cash transfers, social sector investment) and 30% allocated for the MSME sector. The report argues that because households are hoarding cash and reducing discretionary consumption, supply-side credit facilities may only be used for refinancing existing loans rather than adding new capacities.
• There is a significant issue with unpaid receivables owed by the state and central governments to private corporates and MSMEs, estimated to be more than INR 5,000 billion. Specifically, DISCOMs owed power producers INR 905 billion as of March 2020, with INR 68.4 billion of that owed to renewable energy producers.
• The current economic stimulus is described as 'sector-neutral' and largely silent on decarbonization, with an estimate that only about 1.5% of the package directly supports green projects. The report warns that policies such as imposing tariffs on solar modules, cells, and inverters, or opening new coal mines, could derail India's transition to clean energy and its goal to reduce carbon intensity by 33 to 35% by 2030.
• The report proposes several ways to 'green' existing stimulus components: using partial credit guarantees to help MSMEs transition to distributed solar and energy efficiency; directing DISCOMs to prioritize clearing dues for renewable energy (RE) companies; and making clean energy mandatory for agriculture and animal husbandry infrastructure like cold chains.
• Additional recommendations for a green recovery include using the MNREGA scheme to create labor-intensive green assets (forestry, soil and water conservation), aligning affordable housing with green building standards to reduce carbon emissions by 35%, and retiring low PLF coal power plants, which could save DISCOMs USD 1.6 billion per year and reduce GHG emissions by 113 million tonnes annually.

APA

Jena, L. P., Prasad, A., & Niazi, Z. (2020). Greening India’s Recovery Package - Ideas for Consideration. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/09/Greening-Indias-Recovery-Package-Ideas-for-Consideration.pdf

Chicago

Jena, Labanya Prakash, Anubha Prasad, and Zeenat Niazi. Greening India’s Recovery Package - Ideas for Consideration. Climate Policy Initiative, 2020. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/09/Greening-Indias-Recovery-Package-Ideas-for-Consideration.pdf.

Wikipedia

{{cite report |last1=Jena |first1=Labanya Prakash |last2=Prasad |first2=Anubha |last3=Niazi |first3=Zeenat |title=Greening India’s Recovery Package - Ideas for Consideration |publisher=Climate Policy Initiative |date=September 2020 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/09/Greening-Indias-Recovery-Package-Ideas-for-Consideration.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jena2020greening, author = {Jena, Labanya Prakash and Prasad, Anubha and Niazi, Zeenat}, title = {{Greening India’s Recovery Package - Ideas for Consideration}}, institution = {Climate Policy Initiative}, year = {2020}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/09/Greening-Indias-Recovery-Package-Ideas-for-Consideration.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }