By Business India Editorial

Rating agency India Ratings and Research (Ind-Ra) has found that while all states in India are vulnerable to climate change risks, not all of them have the fiscal capacity to respond to the threat posed by climate change, notwithstanding the financial support from the union government/international agencies.

While Assam, Bihar, Chhattisgarh, Jharkhand, Odisha and West Bengal are highly vulnerable to climate change, Bihar and West Bengal are also fiscally highly vulnerable.

States falling in the high vulnerability category both for climate change and fiscal capacity may find it difficult to provide requisite public funding towards climate change mitigating activities and/or the higher relief expenditure if needed in case of natural disasters.

The other category of states is fiscally highly vulnerable and falls in the medium category of climate change vulnerability. These states are Andhra Pradesh, Rajasthan and Uttar Pradesh. Although Himachal Pradesh, Kerala and Punjab also fall in the fiscally highly vulnerable category, their vulnerability with respect to climate change is low. Only two states Maharashtra and Telangana enjoy the status of low climate change vulnerability and low fiscal vulnerability.

There is an absence of climate tagging of budgetary allocation, says India Ratings, however state spending under budgetary heads such as ‘soil and water conservation' and ‘forestry and wildlife’ directly addresses the adaptive response part of the climate change, spending under the head ‘relief on account of natural calamities’ addresses the mitigation response part of the climate change.

A peep into these budgetary heads indicates that states are indeed responding to the threat of climate change through budgetary provision. For example, expenditure intensity (defined as expenditure in year/period divided by expenditure in the previous year/period) of all states combined under the budgetary head of ‘forestry and wild life’ shows a rising trend during FY01-FY05 to FY11-FY15 but declines during FY16-FY20. Such a pattern is also observed in the case of few individual states such as Bihar, Gujarat, Karnataka, Madhya Pradesh, Rajasthan, and West Bengal. Expenditure intensity only for two states Assam and Maharashtra show a consistent increase over FY01-FY05 to FY16-FY20.