In an interaction with Pushpita Dey, Erik Berglöf, Chief Economist of AIIB, discusses how India can accelerate its transition to a greener economy through policy reforms and international collaboration
India has consistently been the largest borrower from the Asian Infrastructure Investment Bank (AIIB) since its inception in 2016, including for several major green financing initiatives. In an interaction with Pushpita Dey, Erik Berglöf, Chief Economist of AIIB, discusses how India can accelerate its transition to a greener economy through policy reforms and international collaboration. Edited excerpts:
Despite the global push for green financing and sustainable infrastructure, emerging economies like India still face hurdles in mobilising green capital. What key steps should India take to accelerate its transition to a greener economy?
What India has achieved in installing renewable energy at very low cost is remarkable, and it has been driven largely by the private sector, supported by effective government policies. But challenges remain — particularly in phasing out coal-based power infrastructure. Significant investment is needed in transmission grids and demand-side improvements that give consumers better control over how much energy they use and what type of energy they consume.
Domestic resource mobilisation must be at the core of this transition — getting the banking system and private sector more deeply involved. But India also has a huge opportunity to attract foreign investment. This is an area where I don’t see enough action yet. Other emerging economies have created country platforms that coordinate and bring transparency to how foreign capital can contribute.
For example, Egypt placed its entire renewable energy pipeline on its country platform, making it visible to multilateral development banks, national development banks, and private investors. As a result, it attracted new forms of green finance, such as a performance-linked bond tied to policy commitments by the Egyptian government. Instruments like this could complement existing forms of green finance in India.
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