Policy Update
Sruti halder
BACKGROUND
The Green Credit Programme (GCP) represents one of India’s most recent attempts to create market-based incentives for environmental conservation and restoration. Announced in the Union Budget 2023–24 and subsequently notified through the Green Credit Rules of 2023 under the Environment (Protection) Act on 12 October 2023. The programme seeks to encourage voluntary environmental actions by assigning measurable value to ecological outcomes. The scheme emerged within the broader framework of India’s climate and sustainability agenda, complementing initiatives such as Lifestyle for Environment (LiFE), the country’s updated Nationally Determined Contributions (NDCs) under the Paris Agreement and the long-term commitment to achieve net-zero emissions by 2070.
The rationale for introducing the programme lies in the growing environmental pressures accompanying India’s economic expansion. Rapid infrastructure development, mining activities, industrial growth and urbanisation have resulted in substantial diversion of forest land for non-forest purposes over the past two decades. Data presented by the Ministry of Environment, Forest and Climate Change (MoEFCC) in Parliament indicate that more than three lakh hectares of forest land were diverted for non-forest use between 2008–09 and 2022–23.
Simultaneously, concerns regarding the effectiveness of compensatory afforestation mechanisms have persisted. Various government reports and audits have highlighted delays in plantation activities, uneven utilisation of funds and challenges in monitoring long-term survival of plantations. In this context, policymakers viewed the Green Credit Programme as an instrument capable of mobilising additional private and institutional resources for environmental restoration while reducing exclusive dependence on public expenditure.
The programme seeks to achieve multiple objectives. At its core, it aims to incentivise voluntary environmental actions by individuals, corporations, public sector enterprises and institutions through a system of recognised environmental credits. The programme also intends to increase tree cover, restore degraded ecosystems, strengthen environmental stewardship and contribute towards India’s climate commitments. Unlike conventional carbon markets that focus primarily on greenhouse gas emissions, the Green Credit framework was conceived as a broader mechanism capable of recognising diverse environmental activities relating to afforestation, water conservation, sustainable agriculture, waste management and biodiversity conservation. However, during the initial phase of implementation, tree plantation remains the only operational activity under the programme.
Several key provisions define the operational character of the programme. Green Credits are awarded only after verification of approved environmental activities and compliance with prescribed methodologies. The programme is administered through a digital platform that records registration, monitoring and issuance of credits. Participation is voluntary rather than regulatory in nature, distinguishing it from traditional compliance-based environmental instruments. Furthermore, the programme emphasises measurable environmental outcomes, thereby seeking to establish a transparent and accountable mechanism for recognising ecological contributions.
FUNCTIONING
The Green Credit Programme functions through a centrally administered digital framework designed to recognise and reward verified environmental actions. The Ministry of Environment, Forest and Climate Change serves as the nodal authority responsible for policy direction and overall oversight, while the Indian Council of Forestry Research and Education acts as the programme administrator. State Forest Departments play a crucial operational role by identifying degraded forest land and facilitating plantation activities within their respective jurisdictions.
Institutional Framework:
| Institution | Role |
|---|---|
| Ministry of Environment, Forest and Climate Change (MoEFCC) | Policy formulation, regulation and overall supervision |
| Indian Council of Forestry Research and Education (ICFRE) | Programme administration, verification and issuance of Green Credits |
| Steering Committee | Oversight, guidance and approval of methodologies |
| State Forest Departments | Identification of degraded land and field-level implementation |
| Green Credit Portal | Registration, monitoring, verification and credit issuance |
Source: Green Credit Rules, 2023; MoEFCC Green Credit Portal.
The programme operates through a structured implementation process where the State Forest Departments first identify degraded forest land suitable for restoration and then upload the details onto the Green Credit Portal. Interested entities subsequently register on the portal and select approved activities. Plantation activities are then undertaken in accordance with standards prescribed by the Ministry. Upon completion, verification is carried out by authorised agencies to assess compliance with technical requirements. Only after successful verification are Green Credits issued electronically to participating entities. This process is intended to ensure that credits are linked to measurable environmental outcomes rather than merely financial contributions.
The implementation timeline reflects a gradual evolution from policy conception to operationalisation. Following its announcement in the Union Budget 2023–24, the draft implementation rules were released by the MoEFCC in June 2023 for public consultation. The Green Credit Rules were formally notified in October 2023, providing the legal basis for implementation. Thereafter, the Indian Council of Forestry Research and Education (ICFRE) was designated as the programme administrator. In February 2024, the Ministry issued detailed methodologies for the tree plantation component, specifying eligibility criteria, monitoring requirements and procedures for awarding Green Credits. During 2024, state governments began identifying degraded forest land and registering eligible parcels through the Green Credit Portal.
A notable feature of the programme is its financing model as the Green Credit Programme does not rely on a dedicated budgetary allocation, unlike many government-sponsored environmental schemes. Instead, it follows a user-funded approach in which participating entities bear the costs associated with plantation and restoration activities. This model seeks to leverage private investment for environmental objectives while minimising additional fiscal burden on the government. In this respect, the programme differs significantly from the Compensatory Afforestation Fund Management and Planning Authority (CAMPA), which is financed through statutory payments collected from project developers.
PERFORMANCE
The period from 2021 to 2023 primarily reflects the environmental and policy context that necessitated the programme, while 2024 marks the beginning of operational implementation. Consequently, official government data available up to 2024 largely relate to land registration, institutional arrangements and stakeholder participation rather than measurable environmental impacts.
According to information furnished by the Ministry of Environment, Forest and Climate Change (MoEFCC) before Parliament, seventeen states had onboarded degraded forest land under the Green Credit Programme by early 2024. A total of 2,364 land parcels covering 54,669.46 hectares had been identified and registered through the Green Credit Portal. Simultaneously, 384 entities, including 41 Public Sector Undertakings (PSUs), had registered to participate in the programme, indicating significant institutional interest during the initial implementation phase.
Initial Progress under the Green Credit Programme (2024):
| Indicator | Status |
| Participating States | 17 |
| Registered Land Parcels | 2,364 |
| Registered Degraded Forest Land | 54,669.46 hectares |
| Registered Entities | 384 |
| Registered Public Sector Undertakings | 41 |
Source: Ministry of Environment, Forest and Climate Change(2024); Green Credit Programme Portal
Although these figures demonstrate progress in establishing the institutional architecture of the programme, they primarily represent inputs rather than outcomes. Registration of land and participating organisations constitutes the first stage of implementation, whereas the ecological benefits of afforestation require sustained monitoring over several years before meaningful assessment becomes possible.
The absence of programme-specific outcome indicators remains a significant limitation. As of the end of 2024, the Ministry had not published official information regarding plantation survival rates, biodiversity improvements, carbon sequestration achieved, or ecosystem restoration attributable exclusively to Green Credit plantations. Similarly, no state-wise performance rankings or independent monitoring reports were available in the public domain. Consequently, the available evidence permits an assessment of administrative progress but not of environmental effectiveness.
Revised 2025 Framework: The government overhauled the forestry guidelines. Tree plantation credits are no longer awarded upon planting alone. Instead, they are tied to a milestone-based mechanism where credits (1 credit per tree) are issued after 5 years, provided the restored land achieves a minimum of 40% canopy density.
Current Operations: Over 8 key areas of environmental improvement including mangrove conservation, air pollution reduction, and waste management are covered. Credits are primarily used for reporting on ESG compliance or meeting Compensatory Afforestation (CA) obligations, and are largely non-tradable (with exceptions only between a parent company and its subsidiaries).
IMPACT
Given its recent introduction, evaluating the impact of the Green Credit Programme requires distinguishing between institutional achievements and environmental outcomes. While official evidence confirms that the programme has successfully established the administrative infrastructure necessary for implementation, its long-term ecological contribution cannot yet be conclusively assessed because afforestation outcomes generally require several years to materialise.
From a policy perspective, one of the programme’s most significant contributions has been the introduction of a voluntary incentive-based approach to environmental governance. Traditional environmental regulation in India has largely relied upon statutory compliance, penalties and mandatory compensatory mechanisms. In contrast, the Green Credit Programme seeks to encourage proactive environmental action by recognising ecological restoration as an activity capable of generating measurable environmental value. This represents an important shift towards combining regulatory governance with market-based incentives.
The programme also has the potential to diversify sources of financing for ecological restoration. By encouraging participation from corporations, public sector enterprises and institutions, it may reduce the exclusive dependence on public expenditure for afforestation activities. Such diversification assumes greater significance considering India’s commitment to create an additional carbon sink of 2.5-3 billion tonnes of CO₂ equivalent by 2030, a target requiring substantial financial and institutional resources.
However, official evidence available up to 2024 suggests that the programme remains largely focused on administrative preparedness rather than ecological performance. Since government agencies have not yet published verified data relating to plantation survival, carbon sequestration or biodiversity enhancement under the programme, it is difficult to determine whether Green Credits have translated into measurable environmental improvements. In policy evaluation terms, the programme has demonstrated progress in terms of outputs such as land registration and institutional participation but evidence relating to outcomes and impacts remains unavailable.
Academic and policy literature further emphasises that tree plantation alone cannot serve as a comprehensive indicator of ecological restoration. The quality of plantations, species diversity, long-term survival rates, ecosystem resilience and community participation ultimately determine environmental success. Consequently, the Green Credit Programme should be evaluated not merely by the number of hectares brought under plantation but by the extent to which these plantations generate sustainable ecological benefits over time. Until such official monitoring data become available, any assessment of environmental impact must remain provisional.
EMERGING ISSUES
The initial implementation of the Green Credit Programme has also highlighted several policy and institutional challenges. The most significant concern relates to the limited availability of official outcome data. While the Ministry has published information regarding registered land and participating entities, comprehensive indicators relating to plantation survival, biodiversity gains and carbon sequestration have not yet been disclosed. This constrains evidence-based evaluation and limits public accountability.
Another challenge concerns the definition and identification of “degraded forest land.” Ecologists and policy researchers have argued that clear scientific criteria are necessary to distinguish genuinely degraded ecosystems from ecologically valuable grasslands, scrublands or community-managed landscapes. Without transparent classification standards, there remains a possibility of inconsistencies in land selection across states.
Institutional coordination also presents an important issue. Effective implementation requires close collaboration among the Ministry of Environment, Forest and Climate Change, ICFRE, State Forest Departments and participating organisations. Variations in administrative capacity across states may influence implementation quality and monitoring standards, potentially leading to uneven programme outcomes.
Questions have additionally been raised regarding the relationship between the Green Credit Programme and existing environmental instruments such as CAMPA and emerging carbon markets. Since multiple policy instruments now seek to incentivise ecological restoration, greater policy coherence will be necessary to avoid duplication, overlapping incentives and inconsistencies in environmental accounting.
Finally, the programme’s long-term credibility will depend upon robust monitoring and independent verification. Transparent disclosure of plantation survival rates, periodic ecological assessments and publicly accessible monitoring reports will be essential for ensuring confidence among participating institutions and the wider public.
WAY FORWARD
The Green Credit Programme represents an innovative addition to India’s environmental policy framework, but its long-term effectiveness will depend upon strengthening implementation and monitoring mechanisms. As the programme expands beyond its initial phase, greater emphasis should be placed on measuring ecological outcomes rather than merely reporting administrative progress.
The government should establish a comprehensive monitoring framework that periodically publishes programme-specific indicators relating to plantation survival, biodiversity enhancement, carbon sequestration and ecosystem restoration. Such information should be made publicly accessible through the Green Credit Portal to enhance transparency and facilitate independent evaluation.
Scientific criteria for identifying degraded forest land should also be standardised across states. Uniform ecological guidelines would reduce ambiguity in land selection while ensuring that restoration activities are undertaken in areas where they generate the greatest environmental benefits.Accurate classification of degraded forest land is critical to the success of the Green Credit Programme, which incentivizes tree planting and ecosystem restoration on lands identified as degraded.
Misclassifying ecologically valuable grasslands, savannas, scrublands, and other naturally open ecosystems as degraded forest land may lead to inappropriate afforestation, causing biodiversity loss and disrupting ecosystem functions such as fire regimes, hydrology, and nutrient cycling. Such misclassification may also result in Green Credits being awarded for activities that compromise, rather than restore, ecosystem integrity, while diverting restoration efforts and resources away from genuinely degraded landscapes.
Finally, future expansion of the programme beyond tree plantation should proceed cautiously with clearly defined methodologies for water conservation, biodiversity restoration, sustainable agriculture and waste management. Diversifying eligible activities would enable the programme to recognise a broader spectrum of environmental contributions while strengthening its role within India’s evolving green economy.
References
About the Contributor
Sruti Halder is pursuing an MSc in Economics at the Gokhale Institute of Politics and Economics. She is committed to leveraging data-driven research and evidence-based policymaking to promote inclusive and sustainable socio-economic development.
Acknowledgment
I am writing to express my sincere gratitude to IMPRI (Impact and Policy Research Institute) for providing me with the opportunity to prepare this policy update article and for fostering a rigorous learning environment that connects research with public policy practice. In addition to this, I’m grateful to Paridhi and Shreeya for their help and suggestions that improved the quality of my policy update.
Disclaimer
All views expressed in the article belong solely to the author and do not necessarily represent the views or policies of the organisation.
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