Animesh Sinha
India is urbanizing fast. By 2036, nearly 600 million people are expected to live in cities. That’s almost 40% of our population. It means our cities will face immense pressure, the existing infrastructures will not be enough: more people will need more coverage of water supply, sewerage and transportation networks, more housing and cleaner air to breathe.
And how much is that going to cost us? According to a World Bank report, around $840 billion by 2036. That’s a staggering amount. But here’s the real question: are our cities rich enough to afford it?
Our cities — the Urban Local Governments (ULGs) — don’t have the money to fund this kind of growth on their own. They mostly rely on the state or central government for support through grants and transfers and these are not enough either. To bridge the gap, we need to bring in private investments also.
Now with increasing climate crisis, here’s where the conversation gets even more urgent — it’s not just about building more infrastructure. It’s about building infrastructure that’s adaptable to climate change, contributes to climate change mitigation and aids prevention and control of pollution and also contribution to India’s moves net-zero target by 2070. That’s where climate finance comes in — a way to fund urban development that’s aligned with our climate goals.
What is Climate Finance?
Climate finance means money—whether from governments, private companies, or other sources—used to support efforts that reduce the impacts of climate change or help us adapt to its effects.
Even though there’s a lot of momentum around green infrastructure and sustainable cities, there’s no clear definition of what actually counts as climate finance in India. One organization might label a project “green” because it installs solar lights, while another might call a new highway “sustainable” because it reduces congestion — even if it doesn’t really lower emissions. Without a shared understanding, it becomes hard to tell which projects are genuinely helping us reach our climate goals — and which are just using the label for funding or visibility. This lack of clarity opens the door to greenwashing — where something is made to look climate-friendly, but isn’t really making a difference.
My interest in climate finance deepened during one of my projects, where I was tasked with classifying urban infrastructure projects into ‘green’ and ‘non-green’ categories. I took it a step further by mapping the green projects against sectors outlined in India’s Sovereign Green Bond (SGB) framework. In doing so, I realized that while the framework offers useful guidance, the eligibility criteria within each sector often felt too broad or high-level. For someone working at the implementation level, I felt there was a need for greater clarity and detail to ensure that project classification is consistent and credible.
How do we fix this?
That’s what my research focuses on. Around the world, countries are building something called a “taxonomy” for climate finance — a kind of rulebook that clearly defines which projects qualify as climate-aligned. The European Union has a detailed one, developed to scale up sustainable investment to help implement the European Green Deal. China, too, has a Green Bond Catalogue to guide investments, which is referred to as the Chinese Taxonomy.
These taxonomies do three important things:
1. Help investors know where their money is going
2. Avoid greenwashing by setting clear standards
3. Guide policies so that fund supports real climate action
What I’m exploring in this research?
I’m looking at global examples of climate finance taxonomies — what’s worked, what hasn’t — and comparing them with India’s current approach. The aim is to figure out what kind of framework would work best here. One that’s transparent, easy to implement, and actually helps cities access climate-aligned funds in the Indian context.
Because right now, cities need to build and expand their infrastructure coverage. A good taxonomy could influence a lot of these of infrastructure development to be “green”. It will serve as an aid to bridge the investment gap for urban infrastructure.
Conclusion
If India wants to build cities that are not just bigger but better — cleaner, greener, and future-ready — then we need to start by getting the basics right. A shared definition may sound simple, but it can unlock huge opportunities — from better funding to smarter policies.
About the Contributor: Animesh Sinha is an Associate at Janaagraha based in Bhubaneswar, Odisha, and a Fellow of the Environment Policy and Action Youth Fellowship (EPAYF) Cohort 2.0.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
Read more at IMPRI:
Sustainability Benchmarking: A Comparison of the ESG Frameworks of Europe and India
Indian Knowledge Systems, 2020: Reviving Ancient Wisdom for Modern Challenges
Acknowledgment: This article was posted by Riya Rawat, researcher at IMPRI.
