The Way Forward
- Science, Technology and Innovation will be a critical tool in India’s accelerated progress towards achieving the SDGs.
- In the social sector, a major focus area will be designing and implementing actions based on science to eliminate deprivations and build resilience.
- Promoting STEM education can contribute to empowering people and equipping them to bring about change.
- Energy is another key area of application of STI. Electricity generation, heat production and transport together account for 70 percent of greenhouse gas emissions globally. Improvements in smart-grid management and long-term electricity storage are needed for India to meet its long term energy demands sustainably.
- Ensuring that these technologies reach everyone becomes essential to achieve the comprehensive SDG agenda.
- There is an immediate need for the government, academia, private sector and civil society to join hands in developing and taking these technologies to the masses.
- Better multi-stakeholder engagement to identify issues, engineering specific solutions and incentivising innovation are the needs of the hour.
Costing and Financing of SDGs
- Achieving the global goals and targets requires huge financial investments.
- While philanthropic and donor funds add up to billions of dollars, it is estimated that globally, a funding gap of USD 2.5 trillion annually must be closed to achieve the SDGs.
- Public financing and private capital are equally important in meeting this gap.
- Given this context, NITI Aayog and the Ministry of Finance have collaborated with the International Monetary Fund (IMF) to undertake a study on SDG costing for select sectors.
- The sectors covered are education, health, electricity, roads and water and sanitation.
- The study methodology quantifies the annual cost of achieving high performance across these five areas.
- For each sector, performance is considered as a function of a set of input variables.
- The median level of inputs for countries that perform well today is identified, with performance being measured by SDG index scores.
- For each country, spending in 2030 is calculated by assigning these input levels and controlling for other factors such as demographics and the level of GDP per capita projected in 2030.
- The study has estimated that making significant progress in these SDG sectors would require an additional annual spending of 6.2 percentage points of GDP by 2030.
- Relative to emerging economies, additional spending is higher in health care and roads and lower in education.
- Overall, in terms of additional spending, India is above the median emerging economies globally and in the middle, amongst the emerging economies in Asia.
- Literacy rate has steadily increased and enrolment rates for the population aged 6 to 14 years is nearly universal.
Expenditure on education as a share of GDP is at par with peer countries and higher than countries with higher SDG 4 index scores; yet outcomes need improvement.
It has been estimated that India could deliver superior outcomes in education by spending more efficiently and reallocating resources.
- A key factor that can help keep India’s spending in education in check relates to demographic dynamics: the student-age population is expected to shrink from the current 38 per cent to 32 percent of the total population by 2030, which will reduce the pressure on educational services.
- The portfolio between private and public spending in education would need to be rebalanced. In the case of peer countries with a strong sectoral record, the overwhelming share of resources for education emanates from the public sector, with only five per cent reliance on private spending. In contrast, private spending contributes 27 percent of overall spending in India.
- India’s health outcomes require further improvement, especially in terms of infant mortality, life expectancy and vulnerability to out-of-pocket payments.
- Relative to peers, total healthcare spending is at 3.7 percent of GDP.
- Overall, the study estimates that the total health care spending would have to gradually increase to deliver superior healthcare outcomes.
- The country needs to expand the number of medical service providers.
- The number of doctors and other health personnel per 1,000 population - 0.7 and 2.9, respectively - needs to approximately double to meet the needs for vital health services and to be more closely in line with the high performers among India’s peers.
- The private and public resource flows to support health outcomes could be rebalanced. The country relies on private outlays – 67 per cent of total health spending, which stands in stark contrast to the strong performers among India’s peer group, whose median private share of spending is 38 per cent.
- This rebalancing can be achieved if the government takes a leading role in carrying out the large additional expenditures needed in the sector.
- Electricity consumption per capita in India is commensurate with the level of GDP per capita. The challenge is to increase electricity capacity in line with the expected demand; as by 2030, the population is expected to grow by about 150 million and GDP per capita is expected to nearly double.
The study estimates that keeping up with this demand will require annual investments, which should be accompanied by the planned shift toward renewable energy, to bring substantial environmental and climate change related advantages
- India has embarked on an ambitious programme to shift its power mix to increase the share of renewable energy. According to the National Electricity Plan, renewable energy sources will increase from 23 per cent in 2019 to 44 per cent of total installed capacity in 2027. The major renewable energy sources include solar and wind, both of which will require investment in battery storage of 136 GWh. The cost per kW of the target energy mix is projected to increase, but the positive externality emanating from this would effectuate large environmental gains.
- Gradually raising access to rural areas by road to 90 per cent by 2030, will require about 2.4 million additional kilometres of all-weather roads, i.e., about 220 thousand kilometres per year. To improve rural access, India needs to keep the pace of growth in rural and urban roads development observed in the past 10 years.
- The private sector has emerged as a key player in the development of road infrastructure. The government’s policy to increase private sector participation has proved to be a boon for the infrastructure industry, with many private players entering the business through the public-private partnership model.
- In addition, the National Infrastructure and Investment Fund (NIIF) was formed to facilitate international and domestic funding in infrastructure and attract equity capital from both international and domestic sources for infrastructure investments in commercially viable projects
- Likewise, the latest budget for 2018-2019 highlights the use of innovative monetising structures like Toll-Operate-Transfer (TOT) and Infrastructure Investment Trusts (InvITs) to monetise public-sector assets, including roads.
- Subnational, institutional and technical capacity requires augmentation to cope with road network expansion. About 90 per cent of the road budget is administered at the subnational level.
- Adding almost 220 thousand kilometres of roads per year represents - besides the financial constraints - a significant technical challenge of doubling the current level of construction, i.e., many more project managers, engineers, landscape planners, technicians, machine operators and workers.
- Central road agencies are well equipped and staffed. State and local level administrations, however, need to increase institutional and technical capacity to cope with road network expansion.
Water and sanitation
- Preliminary estimates suggest that ensuring universal coverage of safe and potable water and sanitation facilities for all rural and urban households will require an aggregate of USD 106 billion over 2020-2030.
- Areas for improvement in this sector include enhancing the management of tariffs - as unsystematic application of tariffs could strain the finances of local governments; improving the mapping of the existing network, which can help bring efficiency gains; and facilitating maintenance and network expansion.
- In addition, efforts should continue to improve wastewater treatment and application of climate resilient solutions.
Improving institutional capacities
- Beyond resources, institutional and capacity constraints need to be addressed.
- The estimates assume that India would be able to combine different inputs efficiently to deliver across the analysed sectors. This would require important reforms.
- For example, in education, extending enrolment to pre-primary and tertiary levels as well as reducing class sizes would require increasing the number of qualified teachers. In health, in addition to raising the quantity and quality of inputs - for instance, health workers and facilities, it is critical to address the financial vulnerability to health care shocks, such as the recent COVID-19 pandemic.
- In infrastructure, raising institutional and technical capacity remains crucial, particularly in rural areas.
Potential strategies for SDG financing
- A range of strategies are being explored to fill the gap between current and required spending on SDG priorities.
- Improving national tax systems, reducing illicit financial flows, infrastructure finance and capital market development, and Foreign Direct Investment promotion are some of the international best practices which have been successful across the world and which are presently being implemented in India.
India has embarked on an ambitious program to shift its power mix to increase the share of renewable energy
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