European Capacity Building Initiative

New Delhi Consultation on Consolidation and Devolution of Climate Finance in India

An informal roundtable consultation with senior government officials on Consolidation and Devolution of Climate Finance in India took place at the India International Centre, New Delhi, India, on 7 August 2015. The consultation was organised by Oxford Climate Policy and the Indian Keystone Foundation, sponsored by BothEnds and ecbi, and co-facilitated by Rita Sharma, former Secretary to the Government of India, Ministry of Rural Development, and Prodipto Ghosh, former Secretary to the Government of India, Ministry of Environment, Forests and Climate Change.

Among the 23 participants were representatives from the Ministries of Agriculture; of Environment, Forests and Climate Change; of Finance; of Health and Family Welfare; of Rural Development; and of Water Resources. The Deputy Managing Director of the National Bank for Agriculture and Rural Development (NABARD), and the Chief General Manager of the Small Industries Development Bank (SIDBI), two of the designated national implementing entities for the Green Climate Fund (GCF), and the Indian member of the GCF Private Sector Advisory Group, also participated.

The purpose of the meeting was:
i. to discuss national arrangements for climate finance, both at the national and the sub-national level with a particular focus on access by local stakeholders, such as vulnerable communities and Micro, Small and Medium Enterprises (MSMEs);
ii. to discuss developments at the Green Climate Fund (GCF), in particular with regard to Enhanced Direct Access; and
iii. to reach out to government actors who have not been significantly engaged in the climate finance discussions so far, but could play an important role.

Pratim Roy, Director, Keystone Foundation, welcomed participants to the meeting, and following a tour de table, handed over to Rita Sharma, former Secretary, Ministry of Rural Development, who chaired the first session on existing arrangements for climate finance in India.

The discussion was kicked off with a presentation by Anju Sharma, Head of the ecbi Publications and Policy Analysis Unit, summarizing her recent study on Consolidation and Devolution of National Climate Finance: The case of India.

Sharma noted that existing arrangements for climate finance in India were dispersed and fragmentary, and invited participants to consider:
• how existing climate finance sources could work together, to achieve clear and common goals and targets; and
• how they could be made to target better the needs of the poor, and be locally owned and driven.

She pointed to the need for a level of “consolidation without centralization,” accompanied by a strong agenda for “devolution,” while proposing that existing arrangements, for instance for the National Rural Employment Guarantee Scheme that also targets the poor and vulnerable, could also be deployed for climate finance.

There was convergence that some form of consolidation and strategic guidance of climate finance flow at the national level, for instance through a national steering committee, would be helpful. Minimally, such a committee should be tasked with monitoring domestic climate finance flows, analysing their effectiveness, and providing recommendations of how shortcomings could be remedied. It was also mentioned that the effectiveness of such a committee could be increased if it had some resources, say in the form of a National Climate Fund, which would allow it to carry out some of these remedial actions itself.

At the same time, there was general agreement that in order to provide funding for local stakeholders (public or private), there is a need for in-country devolution of decision-making in general, and of project approval, in particular. In other words, it was recognised that local projects need local approvals/intermediation.

The second half of the proceedings focussed on the GCF, and the idea of Enhanced Direct Access (EDA). Ousseynou Nakolima, Director of Country Programming at the GCF, joined the discussion virtually from the GCF headquarters in Songdo, South Korea. After a brief message by Nakoulima on why EDA is of paramount importance for the GCF, Ghosh, who was chairing the session, asked Benito Müller, Director ecbi, to give an introductory presentation.

Müller’s presentation began with a brief history of the idea of EDA, in particular in the context of the GCF. He then presented the latest developments, namely the Terms of Reference (TOR) for an EDA Pilot Phase that had been approved at the most recent GCF Board meeting in Songdo (July 2015). The presentation concluded with summary of an Indian case study of how to engage MSMEs through local intermediation.

In the course of the ensuing discussion, particularly on the EDA TOR, Nakoulima was able to answer directly a number of questions by participants, who also raised a number of issues that may need to be taken into account in the formulation of a call for proposals for the EDA Pilot Phase, such as the issue of how to handle multiple implementing entities applying for a pilot programme, in particular with respect to the national oversight and steering function required in the TOR.

After a round of final statements, Roy closed the meeting by thanking the participants, both physical and virtual, and in particular the two co-facilitators who were key to the success of the meeting, both during and in the run up to it.

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