Editor's Note
NOTE: This article was originally published as a product of the Task Force on Climate, Development and the International Monetary Fund, a group of experts convened by the Boston University Global Development Policy Center from around the world utilizing rigorous, empirical research to advance a development-centered approach to climate change at the IMF. Learn more at https://www.bu.edu/gdp/task-force/.
This paper was originally published on April 21, 2022. An updated version of this paper was published on September 15, 2022.
Executive Summary:
DOWNLOADS
This paper looks at India’s expected energy transition towards a low-carbon future, and studies how government revenues from fossil fuels will be affected over the next two decades. It takes the International Energy Association (IEA 2021) scenarios for India and studies how both tax revenues and non-tax revenues for national (Central) and sub-national (State) governments would be affected. The study finds that under fairly standard assumptions on growth, prices and taxes, there would be continued growth in revenues from fossil fuels till 2040. However, revenues would fall significantly as a share of the gross domestic product (GDP) and overall government budget, and this would impose challenges for both the Central and State governments in India. Moreover, since the Central government is the greatest beneficiary of fossil fuels, it would face the brunt of the pressure. The paper also briefly discusses the possible impact of net zero and carbon taxes were India to take that route, as well as how subsidies are expected to impact and be impacted by such considerations.
Laveesh Bhandari
Find on this page
The Centre for Social and Economic Progress (CSEP) is an independent, public policy think tank with a mandate to conduct research and analysis on critical issues facing India and the world and help shape policies that advance sustainable growth and development.