The path to net zero

(Based on NITI Aayog's Scenarios Towards Viksit Bharat and Net Zero: Macroeconomic Implications (Vol. 2), 2026)

Why Net Zero matters for India

India is one of the fastest-growing economies in the world — but it is also one of the most vulnerable to climate change. Erratic monsoons frequently hurt farmers. Heatwaves impact millions of students and daily-wage workers. Floods disrupt millions of lives and cause severe damage to homes, farms and infrastructure. Climate change is not a future problem; it is already costing India money, jobs, and lives.

Besides, India spends a huge chunk of its money importing fossil fuel. This has a profound impact on our economy. Dependence on imported energy weakens our geopolitical strength & energy security and adversely impacts our trade balance, currency, inflation, and rates. Moving away from fossil fuels is not just good for the planet; it makes India less dependent on other countries and less exposed to price shocks.

Finally, the world is changing its trade rules. Countries like those in Europe are starting to charge extra on goods made with heavy carbon emissions. If India wants to keep selling to the world, going green is no longer a choice — it is a business necessity.

India’s strategy

India has promised the world it will reach net zero carbon emissions by 2070. That means, by then, the country will not be adding more greenhouse gases to the atmosphere than it removes. This is a big goal — and it is tied directly to India's dream of becoming a fully developed nation by 2047, what the government calls Viksit Bharat.

India’s pathway to net-zero is built on ambitious targets, such as reaching 500 GW of renewable energy capacity by 2030, meeting 50% of its energy needs from renewables, and reducing emission intensity of GDP by 45% over 2005 levels by 2030.

India is progressing well on the committed path. Today, half of India's electricity-generating capacity comes from clean sources like solar and wind. Government spending on infrastructure has tripled over the last decade. Programmes like PM-KUSUM (solar panels for farmers) and FAME (support for electric vehicles) are pushing the green agenda into everyday life.

What the shift will feel like

Short term (up to 2030): Costs before the gains

India’s net-zero targets, however, is challenging, especially since its per capita emissions are significantly lower than the global average. Despite this, India faces the pressing task of meeting the energy needs of a growing economy while reducing its carbon footprint.

In the short term, transitioning to a low-carbon economy will require massive investments in renewable energy, energy-efficient infrastructure, and clean technologies. The investment gap for this transition is estimated to be substantial—around USD 2.25 trillion more than the business-as-usual scenario. This will pose challenges, as public and private sectors must find ways to mobilize capital without straining India’s fiscal health.

The government will need to step in with subsidies, cash support, and strong social safety nets so that the burden does not fall on those who can least afford it. Coal workers and others in fossil fuel jobs will also need help retraining for new roles in the clean economy.

Medium term (2030–2050): Green jobs and a leaner import bill

By mid-century, the benefits may start showing up. Manufacturing — driven by solar panels, batteries, and clean tech — grows significantly, creating more jobs for skilled workers. India's oil import bill, which currently eats up about 4% of GDP, shrinks dramatically as the country relies less on imported fuel. That means more money stays in India, the trade deficit narrows, and the economy becomes more stable. If the world helps fund India's transition through international climate finance, the gains come sooner and the costs on ordinary people stay lower.

India’s GDP is projected to remain resilient during this period, with growth rates largely unaffected by the transition, driven by increasing investment in clean technologies and infrastructure.

Long run (2050–2070): A stronger, self-reliant India

By 2070, the picture looks very different — and much brighter. India’s economy will have fully transitioned to a low-carbon structure, with green industries driving much of the growth. The shift towards a capital-intensive economy will be evident, as investment in infrastructure, clean energy, and technology development will continue to grow. This shift is expected to increase manufacturing output in clean-tech sectors, significantly improving economic resilience.

India's fuel import bill drops from 4% of GDP today to just 0.2%. The economy is cleaner, more competitive, and far less exposed to global oil price swings. Wages in the clean energy and manufacturing sectors rise. And India becomes a more attractive destination for global investment because it plays by the new, greener rules of the global economy. Growth holds firm — the USD 30 trillion economy target remains in reach.

The Bottom Line

India’s commitment to achieving net-zero emissions by 2070 is a critical step towards a sustainable future. The country faces significant challenges in balancing economic growth with climate action, but it also has a unique opportunity to lead the way in green technologies and low-carbon development. The socio-economic impacts of pursuing a net-zero pathway will be profound, affecting sectors ranging from energy to industry, agriculture, and transportation.

Going net zero does not mean India has to slow down. It means India has to grow smarter. The costs are real in the short run, especially for vulnerable households — and the government must not ignore them. But the long-term picture is one of energy independence, more jobs in new industries, a cleaner environment, and a stronger economy. India has pulled off big reforms before — think GST, UPI, and Aadhaar. The green transition is the next big one. And if done right, it will be worth it. 

India’s AI Moment: A ±5 million job swing by 2031

(Photo Credit IET)

AI (Artificial Intelligence) is no longer a future disruptor—it’s already reshaping how the world operates. For India, a country with 10–11 million tech and customer experience (CX) workers, the stakes are unusually high. AI is already reshaping how India codes, tests, designs, supports, and runs digital work. India’s millions of Tech and CX workers are at the threshold of a major transition to a future that is full of historic new opportunities and risks.

The latest report published by NITI Aayog “Roadmap for Job Creation in the AI Economy” (NITI Aayog–BCG–NASSCOM), delivers a clear message- AI can either shrink India’s tech workforce sharply by 2031—or expand it dramatically. The outcome depends entirely on what India does next.

Here are the key points highlighted in the report.

The Stakes: A ±5 Million Job Swing by 2031

India faces two sharply diverging paths:

If India does nothing:

Tech workforce drops from 7.5–8M → 6M

CX workforce drops from 2–2.5M → 1.8M

If India acts decisively:

Tech workforce grows to 10M

CX workforce grows to 3.1M

This is not about technology alone. It's about policy, skilling, and national coordination.

What AI Is Changing (Fast)

Work

AI boosts productivity across the tech value chain:

·         Code generation: +15–25%

·         Testing & documentation: +20–50%

·         Overall SDLC: +10–20%

·         CX automation: Handles majority of L1 queries

·         Routine, scalable tasks get automated first.

Worker

At risk

·         Junior QA engineers

·         L1 IT support

·         Basic CX representatives

Evolving

·         Full-stack developers

·         Data engineers

·         Cloud DevOps

·         Cybersecurity roles

·         New roles created:

·         Prompt engineers

·         AI architects

·         Ethical AI specialists

·         Quantum ML engineers

·         LLM researchers

Workforce

The pyramid compresses:

·         Fewer entry-level roles

·         Faster ramp-up

·         More judgement-led work

·         Leaner teams

·         Higher skill premium

India’s Three Big Vulnerabilities

Job Displacement Risk

·         60% of formal-sector jobs face automation risk.

·         Entry-level roles are most exposed.

Weak AI Talent Pipeline

·         Limited CS in schools

·         AI curriculum lags global benchmarks

·         Falling share of AI patents & citations

AI Talent Shortage

·         India meets only 50% of AI talent demand

·         Net negative migration of top AI researchers

·         Demand growing 25% CAGR

·         India is rich in talent, but not yet in AI-ready talent.

The Playbook: The India AI Talent Mission

A single, unified, all-of-government mission to make India the world’s AI talent capital.

Embed AI from school to university

·         Universal CS education

·         AI + X degrees

·         Scale AI PhDs

·         Faculty-industry exchanges

Make India a global AI talent magnet

·         AI Talent Visa

·         Competitive grants

·         Returnee researcher programme

·         Tier-1 AI Centres of Excellence

Build a national AI reskilling engine

·         AI Masters for working professionals

·         Sector-specific reskilling (IT, CX, BFSI, healthcare)

·         Large-scale AI literacy (PMKVY/NAPS)

Two Critical Enablers (with IndiaAI Mission)

·         Open-Source AI Commons

Public datasets, models, benchmarks

·         National Compute Grid

Affordable GPU access for students, startups, universities

Remember: Without compute + open data, talent simply migrates abroad.

The Bottom Line

AI can make India a global AI workforce hub or a net job loser

The difference rests on speed, scale, and strategic coordination.

India has the people. AI gives them leverage. A national mission gives direction.

The next 4–6 years will decide whether we ride the AI wave—or get swept under it.

Towards a trust-based tax governance structure

Recently, NITI Aayog published a working paper titled “Towards India’s Tax Transformation: Decriminalization and Trust-Based Governance”. The paper is a follow up to the recent enactment of the Income Tax At 2025. It is an extremely important step for making the tax governance structure trust based.

The paper seeks to provide a comprehensive and critical analysis of the criminal provisions within the Income-tax Act, 2025, mapping the present extent of criminalization, documenting omissions and modifications, and recommending a trust-based regulatory transition for India’s direct tax regime.

Recognizing the evolving policy landscape which stresses ease of business, citizen-centricity, and the need to move away from “fear-based” enforcement, the paper evaluates each criminal provision through a principled criminal law-making framework rooted in jurisprudence, comparative regulatory best practices, and provides recommendations. Its central premise is that decriminalization, rationalization of punishments, and emphasis on proportionate sanctions will collectively align India’s income-tax law with the vision of a fair, accessible, and modern compliance regime.

Summary of the working paper

·         The paper argues that India’s direct tax regime historically over-criminalized even minor procedural defaults. The Income Tax Act 2025 reduces criminalization but still criminalizes 35 acts across 13 provisions.

·         Applying a principle based criminal law creation framework (harm, necessity, proportionality, intent, clarity), it proposes further decriminalization, removal of mandatory jail terms, restoring burden of proof to prosecution, clearer drafting, and periodic review.

·         It recommends prosecution should be reserved only for willful / fraudulent / significant harm behaviors. All else must be a civil penalty domain.

Strong points

The paper correctly identifies the problem of reverse burden of proof in ITA 2025.

Appropriately flags the disproportionate penalty design relative to the BNS

Correct categorization: obstruction / evasion / payment failure / public servant breach

For the first time a government working paper explicitly shifts “normative anchor” from “enforcement” to “trust”. To this extent there is a paradigm shift.

Gaps

Economic modelling absent: The paper doesn’t quantify fiscal impact of decriminalization vs retaining criminal penalty for 6 core offences. This would be a critical input for developing a policy consensus amongst various organs of the policy ecosystem.

Operational tradeoffs not analyzed: CBDT has historically used criminal threat to solve compliance capacity problem — paper assumes that trust-based regime reduces admin cost but does not model enforcement substitution cost.

Digital rights section inadequate: The section on access to passwords / virtual digital space rightly flags constitutional risk, but it does not propose a constitutional safe harbour architecture. Merely stating risk is not sufficient policy, in my view.

No sunset architecture: The Paper proposes periodic legislative review but does not create an actually enforceable review mechanism (eg automatic expiry unless reviewed).

No tiering by taxpayer class: The compliance behavior of various entities - MSME, gig, self-employed, salaried - is structurally different. A single criminalization framework may not be optimal.

No distinction between pre-assessment vs post-assessment domain: Anecdotally, most criminal threats in India are misused in pre-assessment stage. That is where maximum fear is. Paper doesn’t solve this location of harm.

Suggestions

Policy Design Enhancements

·         Create a mandatory 3 tier compliance framework

Tier 1 → civil / monetary

Tier 2 → administrative sanctions (suspension of benefits, loss of fast track processing eligibility)

Tier 3 → criminal only for fraud / fabrication / concealment > threshold

·         Make fraud the only anchor for criminal prosecution — remove “willful” / “knowledge” from the criminal domain entirely.

·         Introduce statutory requirement of “loss to revenue proven / or reasonably demonstrable” as condition precedent for criminal prosecution.

·         Introduce decriminalization sunset — every 5 years offences auto lapse unless reconfirmed.

·         Create statutory economic impact statements for introduction or retention of each criminal offence (OECD style).

·         Shift burden of proof back to prosecution & codify it explicitly.

Digital Rights

·         Separate digital compelled access into national security statute not tax statute - create clear bright line: no compelled password disclosure for tax.

·         Any digital compelled access must require judicial pre-authorisation (not officer discretion).

Conclusion

This is one of the most important tax policy drafting direction papers in the last 20 years. However, there is a risk that this remains normative but NOT enforceable reform. If NITI fixes some missing parts and layers, especially in fiscal impact modelling and behavioral economics, this could become an illustrative reform for most emerging market governments.

Strategy for Viksit Bharat @2047

 The Niti Aayog published a working paper titled “India’s Path to Global Leadership: Strategic Imperatives for Viksit Bharat @2047”, in April 2025. The paper presents a roadmap for India’s economic growth, encompassing sustainability, social inclusion, national security, and global leadership.

The paper outlines a strategic framework for achieving the goal of a developed India by 2047, by focusing on four key tasks: (i) Economic Competitiveness and Growth; (ii) National Security and Stability; (iii) Global Partnerships and Strategic Influence; and (iv)Legal Reforms and Good Governance. The paper emphasizes that successful completion of these tasks will require collective effort, collaboration, and sustained commitment across all sectors of society, government, and industry.

Summary of the working paper

Four Strategic Pillars

·         Economic Competitiveness & Growth: streamline regulations, boost innovation (R&D, AI, smart cities), enhance human capital, infrastructure, and digitalization.

·         National Security & Stability: modernize defense, strengthen cybersecurity, ensure internal stability, and build disaster resilience.

·         Global Partnerships & Strategic Influence: expand trade and diplomatic ties, engage in multilateral forums, secure technology/resource deals, and lead on global issues.

·         Legal Reforms & Good Governance: increase judicial efficiency, simplify regulations, combat corruption, and enhance transparency.

Roadmap and vision

Economic Growth

·         Target sustained 8-10% annual GDP growth through structural reforms, infrastructure development, and digital transformation.

·         Focus on enhancing manufacturing, services, and exports to drive economic expansion.

·         Emphasize on sustainable growth, aiming for net-zero emissions by 2070 through renewable energy and sustainable practices.

Human Development

·         Ensure universal access to quality education, healthcare, and skill development to build a future-ready workforce.

·         Aim to reduce poverty and inequality, ensuring inclusive growth across regions and communities.

·         Promote women-led development through policies enhancing workforce participation and leadership roles.

Technology and Innovation

·         Attain leadership in AI, quantum computing, and green technologies to position India as a global innovation hub.

·         Scale up R&D investment to 2.5% of GDP by 2047, fostering public-private partnerships.

·         Achieve digital inclusion through nationwide high-speed internet and digital literacy programs.

Infrastructure Development

·         Make massive investments in physical infrastructure (roads, railways, ports) and urban development to support economic growth.

·         Promote smart cities and sustainable urban planning to accommodate a growing urban population.

·         Develop resilient infrastructure to address climate change challenges.

Global Leadership

·         Become voice for the Global South, pursue equitable global governance.

·         Look for strong strategic partnerships with major economies while maintaining strategic autonomy.

·         Use foreign policy to diversify supply chains and energy imports. Build coalitions for green‑tech, regulatory alignment, and IP protection. Streamline bureaucracy to support investment and tech transfer.

·         Enhance India’s soft power through culture, diaspora engagement, and international cooperation.

Governance and Reforms

·         Streamline regulatory frameworks to improve ease of doing business and attract FDI.

·         Pursue judicial and administrative reforms to ensure efficiency, transparency, and accountability.

·         Promote cooperative federalism, empowering states to align with national development goals.

Social and Environmental Sustainability

·         Focus on achieving SDGs, particularly in health, education, and gender equality.

·         Promote sustainable agriculture and food security through technology and policy interventions.

·         Prioritize environmental conservation, including afforestation and biodiversity protection.

Security and Resilience

·         Strengthen national security through modernization of defense and cybersecurity frameworks.

·         Reduce reliance on foreign suppliers; diversify sourcing. Use PPPs for maintenance, land use, R&D, and MSME participation. Encourage foreign partnerships for tech transfer and joint exercises. Adopt blockchain, encryption, cybersecurity protocols.

·         Update defence laws (e.g., Defence Acquisition Procedures, Defence of India Act).

·         Make the planning process strong enough to build resilience against economic, environmental, and geopolitical shocks.

Key Economic Challenges

Complex regulations, poor infrastructure, low R&D investment, rigid labour laws, energy insecurity, and limited global supply‑chain integration.

Recommended Economic Reforms

·         Simplify bureaucracy via e‑governance and single‑window systems.

·         Modernize judiciary: fast‑track courts, digital case management, and alternative dispute resolution (ADR) mechanism.

·         Reform labour laws and support gig workers.

·         Strengthen education, vocational training, and industry‑academe linkages.

·         Boost R&D with tax incentives, grants, and innovation hubs.

·         Invest in logistics, smart cities, and digital infrastructure.

·         Pursue balanced energy policy: renewables, efficiency, reserves.

·         Negotiate Free Trade Agreements (FTAs), modernize Bilateral Investment Treaties (BITs), integrate into global value chains.

·         Consolidate fiscal policies, optimize spending, manage debt, stabilize the rupee.

The report is more of a vision document rather than an action plan, Its sets out ambitious targets like (i) sustained annual GDP growth of 8-10%; (ii) achieving net-zero emissions by 2070; (iii) scaling up R&D investment to 2.5% of GDP by 2047; and (iv) enhancing manufacturing and services, promoting green growth, and investing in education and healthcare. It also talks about some structural reforms like (i) streamlining regulatory frameworks to improve the ease of doing business; (ii) promoting cooperative federalism; and (iii) encouraging women-led development through workforce participation policies.

However, it does not answer the question “how”. Previously several policy papers and election manifesto have spoken about these targets, tasks, goals and reforms. The execution has however been lacking consistently. It is to be seen whether things could be different this time.

If things do turn out to be different this time, we may see two decades of accelerated, sustainable and inclusive growth. As of this morning, I have little to hold this hope. But the way things are evolving globally, the situation may change quickly and dramatically. I am therefore keeping my fingers crossed and hoping for the best.

India’s MSME Challenge

Micro, small and medium size enterprises (MSME) have been widely recognized as the core of India’s development plan. MSME are not only critical from their economic importance, but are also drivers of social development. MSMEs generate large employment; help in managing regional imbalances; help in bridging income and wealth inequalities; and most importantly, enable the large enterprises to attain competitive scale and efficiency. MSMEs contribute 30.1% to India’s Gross Value Added and 45.79% to exports (₹12.39 lakh crore in 2024-25).

Unfortunately, in the past 10 years, especially in the wake of demonetization, GST implementation and Covid-19 pandemic, India’s MSME sector has faced serious challenges to growth.

The NITI Aayog in a recent report, “Enhancing Competitiveness of MSMEs in India,” prepared in collaboration with the Institute for Competitiveness, has provided a strategic roadmap to strengthen India’s MSME sector. The report identifies key challenges and proposes reforms across financing, skilling, innovation, and market access, with a focus on textiles, chemicals, automotive, and food processing sectors. The report examines the key challenges faced by the MSME sector in India and makes some good recommendations to overcome these challenges.

Among other things, the report emphasizes the importance of integrating into the global value chains (GVC) for India’s MSMEs. Pertinent to note that India is still a fringe player in GVC, representing only 1.5% of global GVC exports or $241 billion as of 2017, with the largest share, about 10%, heading to the United States.

As per the report, “Integration into GVC refers to the extent to which a nation’s exports are embedded within multi-stage international trade processes. This concept refers to the integration of domestic value added into the exports of other nations, as well as the incorporation of foreign value added into a nation’s exports. The proportion of a nation’s total exports that is comprised of GVC participation provides a quantitative assessment of the extent to which its export sector relies on GVCs. GVC metrics also play a crucial role in assessing the extent to which sectors depend on international manufacturing networks.

GVCs are crucial for engaging with the global market, by concentrating on the development of specialised products and specialising in particular segments of the production chain. Furthermore, GVCs serve as critical facilitators of the international exchange of investment, knowledge, and managerial practices that are in line with global standards, thereby significantly bolstering domestic businesses. Gaining access to these globally recognised best practices offers emerging economies unparalleled prospects for growth and the augmentation of their export capabilities.”

Key Challenges faced by India’s MSMEs:

Financing: Only 19% of MSME credit demand was met by FY21, with an ₹80 lakh crore credit gap due to limited formal loan access and high-risk perception.

Skilling: A significant portion of the workforce lacks formal vocational training, hindering productivity and scalability.

Innovation & Technology: Limited R&D investment, outdated technology, and barriers like poor internet connectivity and high costs impede digital adoption.

Market Access: Low product diversification, weak branding, and inadequate marketing facilities limit competitiveness.

Data Gaps: Inadequate data, especially via the UDYAM portal, hinders policymaking.

“Missing Middle”: A lack of medium-sized enterprises (97.92% micro, 1.89% small, 0.01% medium as of 2023) restricts sector growth.

Recommendations to meet challenges

Financing: Revamp the Credit Guarantee Fund Trust, support NBFCs, and ease state-level subsidy norms.

Skilling: Expand vocational training and address the 3.9% drop in knowledge-based hiring.

Technology & Innovation: Promote AI adoption, subsidize technological upgrades, and invest in Industry 4.0 for textiles and chemicals.

Market Access: Provide export incentives, quality certifications, and digital marketing training, with a focus on northeastern and eastern India.

Policy & Data: Enhance state-level policy awareness, improve data integration (e.g., via PLFS and UDYAM), and engage stakeholders like women-owned enterprises.

The report emphasizes cluster-based development, stronger institutional collaborations, and consistent policy monitoring to integrate MSMEs into global value chains (GVC), fostering sustainable economic growth.