Green Accounting in India: Implementation, Challenges and Current Status

India’s GDP has grown at an impressive pace over recent decades, but that number tells only part of the story. It counts the revenue from mining a mineral deposit as income – but it doesn’t subtract the value of the resource that’s now gone forever. It records the output of a factory but ignores the cost of the air pollution it generates. This gap between what GDP measures and what actually constitutes national wealth is exactly why green accounting has become an urgent priority for India. Green accounting – also called environmental or natural capital accounting – adjusts conventional economic measures to factor in the depletion of natural resources and the costs of environmental degradation, giving policymakers a far more accurate picture of sustainable development.

Why GDP falls short for a country like India 🔗

GDP growth rates have long been the default benchmark for India’s economic performance. But GDP is fundamentally a measure of economic throughput, not welfare or sustainability. It fails to capture changes in the quality of public health, the spread of education, or the degradation of forests, water bodies, and air quality – all of which directly affect citizens’ wellbeing, particularly for the rural poor whose livelihoods depend on natural resources.

For India, this blind spot is significant. The country hosts extraordinary biodiversity, vast forest cover, major river systems, and mineral-rich sub-soil assets. When these are depleted to fuel economic growth, GDP goes up. But national wealth – in any meaningful sense – may actually be declining. The Green Indian States Trust (GIST) has pointed out that without appropriate metrics to distinguish sustainable from unsustainable development, the path toward genuine development remains unclear. Symptoms of this problem are visible: persistent rural-urban wealth gaps, underinvestment in health and education, and accelerating natural resource depletion.

This is precisely why the concept of green GDP – which adjusts conventional GDP by deducting environmental costs and adding the value of human capital formation – has gained traction among Indian economists and policymakers.

The GAISP initiative: India’s first systematic attempt 🔗

The most significant early effort to operationalize green accounting in India was the Green Accounting for Indian States and Union Territories Project (GAISP). GAISP was launched in July 2004 by GIST, with the recognition that GDP growth percentages are too narrow and often misleading as indicators of real economic progress.

The project’s core goal was to build a framework of adjusted national and state accounts that represent genuine net additions to national wealth – including benefits from nature that are typically “invisible” in conventional accounts. GAISP set up top-down economic models to produce state-wise annual estimates of an adjusted Gross State Domestic Product (GSDP) for all major Indian states and union territories.

What GAISP measured 🔗

GAISP covered a wide range of natural resource categories. Its six published monographs evaluated adjustments to GSDP accounts for forest resources (including ecosystem services, biodiversity, and carbon sequestration), water resources, air quality and pollution costs, land degradation, soil quality, and additions to human capital through education. Importantly, GAISP adapted a top-down macroeconomic approach to maintain consistency and impartiality across states, using only official Indian national databases – a critical step for ensuring the legitimacy and comparability of results.

The methodology followed the United Nations’ System of Environmental and Economic Accounting (SEEA) guidelines, aligning India’s efforts with global standards. GAISP’s work also had direct policy impact: the Central Empowered Committee of India used GIST’s forest valuation methods and monographs to calculate the Net Present Value (NPV) payable when forest land is converted for non-forest use.

Green accounts vs. conventional GSDP 🔗

The green accounts that GAISP produced offered a fundamentally different view of state-level development. States with high conventional GSDP growth but heavy extraction of forests or minerals showed significantly lower adjusted figures. This made it possible to distinguish genuine economic progress from growth that was simply consuming the country’s natural inheritance. Green accounts for India and its states provide a much better measure of development compared to GDP or GSDP growth alone, and encourage sustainable development as a focus of economic policy at both national and state levels.

The role of India’s statistical bodies 🔗

Alongside GAISP, India’s official statistical machinery has been progressively building the infrastructure for green accounting. The Ministry of Statistics and Programme Implementation (MoSPI) has been the central institutional player in this effort.

Green National Accounts framework (2013) 🔗

A major milestone came in 2013 when MoSPI released the Green National Accounts in India: A Framework document, which laid out a roadmap for systematically incorporating natural resources into India’s national accounts. The framework covered land, water, air, forests, and sub-soil assets, though full implementation across all states and sectors remained a work in progress.

The NCAVES project and EnviStats India 🔗

The most significant recent initiative is the Natural Capital Accounting and Valuation of Ecosystem Services (NCAVES) project, coordinated by MoSPI’s Social Statistics Division in collaboration with UNEP and funded by the European Union. India’s first official environmental economic accounts were released in 2018, containing asset accounts in physical terms for four key natural resources: forests, land, minerals, and water. These accounts revealed a nuanced picture – several regions showed net-positive increases in forest cover and carbon stock, while others indicated depletion.

Since then, MoSPI has published annual EnviStats India reports covering ecosystem extent, condition, and services – adding layers of detail with each edition, including soil nutrient indices, water quality accounts, crop provisioning services, and species richness data. India is now recognized as a global leader in natural capital accounting through the NCAVES project, and chairs the SEEA Taskforce on Indicators – a significant international recognition of the country’s progress in this domain. Sub-national ecosystem accounts have also been developed for Karnataka, led by the Indian Institute of Science, benefiting from strong local data availability and research capacity.

Corporate green accounting: SEBI’s BRSR mandate 🔗

Green accounting in India is not limited to national statistics – it is increasingly entering corporate reporting as well. The Securities and Exchange Board of India (SEBI) made Business Responsibility and Sustainability Reporting (BRSR) mandatory for the top 1,000 listed companies from FY 2023-24. This framework requires environmental disclosures including energy usage, greenhouse gas emissions, and waste management – aligning India’s corporate sector with global ESG standards. Additionally, the Reserve Bank of India issued guidelines in 2023 encouraging financial institutions to incorporate climate risk into their operations, and several urban local bodies have introduced green budgets at the city level.

Key challenges in implementation 🔗

Despite this progress, green accounting in India faces substantial and persistent challenges that prevent it from being fully integrated into mainstream planning and policy.

Data gaps and collection limitations 🔗

Comprehensive environmental data at the state and district level remains inconsistent. Many sectors – particularly informal economic activities that directly depend on natural resources – are poorly documented. The sheer geographic and ecological diversity of India makes standardized data collection difficult and expensive.

Valuation complexity 🔗

Assigning monetary values to ecosystem services involves significant methodological difficulty. How do you price the carbon sequestration service of a forest, or the flood regulation value of a wetland? As GAISP’s own methodology documentation acknowledges, values like “option value” (willingness to pay for future conservation) and non-use or existence values are difficult to calculate due to insufficient research and data in the Indian context. Different valuation approaches can yield very different numbers, creating uncertainty in results.

Institutional and policy barriers 🔗

Even where green accounting data exists, it has not yet been formally integrated into India’s budgeting and planning cycles. There is currently no independent advisory body with statutory powers to guide policy based on natural capital data, and no fully integrated national comprehensive wealth framework that embeds all capital forms – human, social, natural, and financial – into planning decisions. Green accounting remains largely a statistical exercise rather than a binding input into development planning.

Capacity and awareness gaps 🔗

Implementation is also constrained by a limited pool of trained professionals who can apply environmental-economic accounting methods, and by relatively low awareness among policymakers at the state level about what green accounts can tell them and how to use those insights in practice.

Current status and the way forward 🔗

India’s green accounting journey has come a long way from the early GAISP monographs of 2004. Today, MoSPI publishes annual environment accounts aligned with the UN SEEA framework, covering an expanding range of domains including material flow, solid waste, fish provisioning, and soil erosion prevention services. NITI Aayog’s SDG India Index (2023-24) tracks sub-national progress against 113 indicators aligned with MoSPI’s National Indicator Framework, offering another layer of sustainability measurement.

However, Green GDP is yet to be fully implemented in India – the accounts being produced are largely physical and partial monetary accounts rather than a fully adjusted GDP figure that gets reported alongside conventional national income data. Moving from experimental accounts to a green GDP that actually informs budget allocations and development priorities will require stronger institutional mandates, more investment in data infrastructure, and political will to act on metrics that may challenge narratives of rapid economic growth.

The trajectory is nonetheless encouraging. India’s leadership in international bodies like the SEEA Taskforce, the Karnataka sub-national accounts, SEBI’s mandatory BRSR framework, and the expanding scope of EnviStats India reports all point toward a system that is gradually maturing – one that may, in time, give Indian policymakers the tools they need to pursue genuinely sustainable development rather than growth that exhausts the very foundations it depends on.

What do you think? If India’s development rankings were based on green GDP rather than conventional GDP, which states do you think would rise or fall – and why? And should green accounting metrics be made legally binding inputs into state budget planning, or is voluntary adoption a more realistic path forward?

References

1. https://www.gistindia.org/about2
2. https://www.gistindia.org/gaisp
3. https://www.cbd.int/financial/values/india-valuebioforest.pdf
4. https://seea.un.org/content/natural-capital-accounting-and-valuation-ecosystem-services-india
5. https://www.unep.org/topics/teeb/natural-capital-accounting-and-valuation-ecosystem-services/NCAVES-India
6. https://greeneconomytracker.org/country/india
7. https://www.ijprems.com/ijprems-paper/green-accounting-in-india-a-pathway-towards-sustainable-economic-growth-and-environmental-responsibility
8. https://www.cbd.int/financial/values/india-greenaccountingmethodology.pdf
9. https://www.mospi.gov.in/natural-capital-accounting-valuation-ecosystem-services-ncaves
10. https://rsisinternational.org/journals/ijrsi/articles/implications-of-green-gdp-in-india/