Economic Survey 2025-26 Chapter 10 Summary for UPSC
Chapter 10 of the Economic Survey 2025-26, titled Environment and Climate Change: Building a Resilient, Competitive and Development-Driven India, presents India’s climate strategy as a development-centric framework.
The chapter argues that India’s climate action must protect growth, resilience, energy security and industrial competitiveness. It does not treat climate policy as a separate environmental add-on; rather, it places climate action inside the broader development strategy of Viksit Bharat 2047.
For UPSC, this chapter is extremely important because it connects environment with economy, energy transition, critical minerals, climate finance, disaster resilience, international negotiations, environmental regulation and behavioural change through Mission LiFE.
Chapter Snapshot: Most Important Facts
The core message of the chapter is: India’s climate policy is not anti-growth. It argues that development, resilience, energy security and environmental stewardship must move together. For India, development itself is a major form of adaptation.
Climate Realism: Why India Argues for a Development-Driven Pathway
The chapter begins by noting that the global climate agenda has reached an inflection point. Rapid decarbonisation in some advanced economies has exposed operational challenges: grid congestion, storage gaps, higher balancing costs, transmission bottlenecks and industrial stress.
The Survey uses examples from Europe, including the Netherlands and Spain, to show that renewable energy expansion must be matched with grid readiness, storage capacity, system buffers and institutional capability. The argument is not against renewable energy; it is against poorly sequenced transitions.
India’s Three Climate Strategy Pillars
India is vulnerable to floods, droughts, heat stress, water insecurity, food security concerns and sea-level risks. Adaptation protects livelihoods and infrastructure.
India is scaling renewables, energy efficiency, green hydrogen and nuclear power while prioritising affordability, energy security and industrial competitiveness.
International climate finance remains inadequate, so India is strengthening green bonds, green deposits, sustainable finance and domestic institutions.
Environmental regulation is moving from command-and-control towards risk-based, technology-enabled and outcome-oriented governance.
India’s climate approach can be described as “development realism”: climate action must reduce vulnerability, preserve energy security, support growth and remain technologically feasible.
Adaptation: Strengthening Climate Resilience
Adaptation is central to India’s climate policy because the physical impacts of climate change directly affect livelihoods, infrastructure, agriculture, water security, health and disaster losses. Unlike mitigation, adaptation provides immediate local benefits.
The 2025 Adaptation Gap Report estimates that developing countries will require USD 310-365 billion annually by 2035 for adaptation, while current international public adaptation finance is only around USD 26 billion.
National Missions and Adaptation
India’s National Action Plan on Climate Change works through nine missions. Many of these are adaptation-focused, including sustainable agriculture, water, Himalayan ecosystem, sustainable habitat, Green India, strategic knowledge and health.
| Mission / Initiative | Adaptation Role | UPSC Meaning |
|---|---|---|
| National Mission on Sustainable Agriculture | Promotes climate-resilient farming, Per Drop More Crop, rainfed area development and soil health management. | Agriculture resilience and water efficiency. |
| National Water Mission | Supports conservation, fair access, state-specific plans and rainwater harvesting. | Water security under climate stress. |
| National Programme on Climate Change and Human Health | Raises awareness and strengthens health systems for climate risks. | Climate-health linkage. |
| National Mission on Sustainable Habitat | Integrates adaptation into urban development, sanitation and urban transport. | Urban resilience and liveability. |
| National Coastal Mission | Strengthens coastal zone management and resilient infrastructure. | Sea-level rise and coastal vulnerability. |
| MISHTI | Mangrove restoration over about 540 sq km across nine coastal states and four UTs during 2023-2028. | Nature-based adaptation and coastal livelihoods. |
Evolution of SAPCCs
State Action Plans on Climate Change translate national climate objectives into state-level action. The chapter notes a shift from mitigation-oriented and standalone climate projects to adaptation-led development integrated with planning, finance departments, local institutions and flagship schemes.
Earlier phase: Broad alignment with NAPCC missions, mitigation-oriented sectors, standalone climate projects and limited budgetary linkage.
New phase: Adaptation-led development, state and district-specific risk analysis, convergence with water, agriculture and urban schemes, stronger local institutions and outcome-based resilience monitoring.
Subnational Adaptation: State and Local Climate Resilience Models
The chapter highlights that climate adaptation must be local because climate risks vary by geography and community. Indian states and cities are experimenting with ecosystem-based adaptation, water governance, coastal restoration, heat insurance, community radio and cooling infrastructure.
| State / City | Initiative | Key Fact | UPSC Significance |
|---|---|---|---|
| Kerala | KERA Project | USD 285 million / ₹2,365 crore project to benefit over 4 lakh farmers. | Climate-resilient agri-value chains. |
| Meghalaya | MegARISE and Spring Mapping | More than 55,000 springs mapped; 8,430 ha plantation planned. | Ecosystem-based water security. |
| Odisha | Pani Panchayats and Irrigation Project | Over 39,000 Pani Panchayats; 28.8% rise in water productivity. | Community-led water governance. |
| Tamil Nadu | Coastal Restoration Mission | 1,069 km coastline covered through blue economy and coastal protection approach. | Coastal climate resilience. |
| Ahmedabad | Parametric Heat Insurance | Annual premium ₹354; payout ₹750-₹1,250 when heat thresholds are crossed. | Heat stress treated as economic shock. |
| Uttarakhand | Mandakini Ki Aawaz | Community radio provides early warnings and disaster advisories. | Local disaster preparedness. |
| Jodhpur | Net-zero cooling station | About 8°C cooler inside during peak heat hours in April 2024. | Urban heat resilience for informal workers. |
Springs, catchments, irrigation systems and community water governance reduce drought vulnerability.
Insurance, agri-value chains and women-led enterprises convert climate adaptation into income security.
Heat Action Plans, cooling stations and climate-sensitive planning protect workers and cities.
Mangroves, wetlands, catchments and coastal restoration provide natural buffers.
Adaptation should not be limited to forests and water bodies. The chapter says it must be built into economic frameworks, business models, urban planning and local governance.
Mitigation: Transition to a Low-Carbon Economy
India’s mitigation strategy is multifaceted: increase non-fossil capacity, scale renewable energy, improve energy efficiency, expand nuclear power, develop green hydrogen, strengthen carbon sinks and create carbon markets.
The chapter warns that energy transition must not compromise reliability. The experience of countries such as the UK, Germany, Spain and the Netherlands shows the risks of moving faster than baseload, transmission and storage readiness.
Renewable Energy and Non-Fossil Capacity
India surpassed the target of 50% installed power capacity from non-fossil fuel sources. Non-fossil capacity stood at 51.93% by the end of December 2025. India ranks fourth globally in total installed renewable energy capacity.
Clean Energy Initiatives
| Initiative / Sector | Key Fact | UPSC Meaning |
|---|---|---|
| Solar Energy | Solar capacity rose forty-five-fold from 3 GW in 2014 to nearly 135.81 GW by December 2025. | India’s major clean energy expansion. |
| PM Surya Ghar | 8 GW rooftop capacity installed by December 2025. | Household-level solarisation. |
| PM-KUSUM Component B | More than 9.75 lakh standalone pumps installed by December 2025. | Agriculture energy transition. |
| Solar Parks | 55 solar parks with 39,973 MW sanctioned capacity approved. | Utility-scale renewable deployment. |
| Wind Energy | India has the fourth-highest wind installed capacity globally at 54.51 GW by December 2025. | Renewable diversification. |
| Bio-energy | 51.21 lakh small biogas plants installed by October 2025. | Decentralised clean energy and waste management. |
| Green Hydrogen Mission | Targets 5 MMT green hydrogen annually by 2030. | Hard-to-abate sectors and future fuel. |
| Nuclear Energy Mission | Targets 100 GWe of nuclear power capacity by 2047. | Reliable low-carbon baseload power. |
SHANTI Act 2025 and Nuclear Energy
The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025 is a landmark reform. It modifies the nuclear legal framework to enable private sector and state government participation in nuclear power, plant operations, equipment manufacturing and research, while retaining safety and compensation safeguards.
Battery Storage and Critical Minerals: The New Transition Bottlenecks
The Case for Battery Storage
Renewable energy requires storage because solar and wind are intermittent. The Central Electricity Authority estimates India will need around 336 GWh storage by 2029-30 and 411 GWh by 2031-32.
Storage Policy Measures
Energy storage systems are included in the Harmonised Master List of Infrastructure.
Storage is embedded in resource adequacy planning and national storage frameworks.
Inter-state transmission charges waived for eligible co-located BESS and pumped storage projects until June 2028.
₹18,100 crore ACC PLI scheme and two VGF schemes support battery deployment.
Critical Minerals
The chapter argues that the global energy transition is increasingly shaped by control over critical minerals such as lithium, cobalt, nickel, copper and rare earth elements. These minerals have become strategic chokepoints for energy security, industrial competitiveness and geopolitical power.
A clean energy transition can become unaffordable or unjust if critical mineral standards become market barriers, if developing countries remain only raw material exporters, or if sustainability premiums increase costs without finance and technology support.
National Critical Mineral Mission
The National Critical Mineral Mission aims to secure domestic and foreign sourcing of critical minerals and strengthen value chains from exploration and mining to processing and recycling.
Carbon Credit Trading Scheme: From Framework to Implementation
India adopted the Carbon Credit Trading Scheme in June 2023. It operates through a dual mechanism: a mandatory compliance mechanism and a voluntary offset mechanism.
Compliance Mechanism
The compliance mechanism targets energy-intensive sectors through an emission intensity-based baseline-and-credit system. It initially covers sectors such as cement and iron and steel. In 2025, pro-rata GEI targets were notified for Aluminium, Cement, Chlor-Alkali, and Pulp and Paper.
Offset Mechanism
Non-obligated entities may voluntarily register projects that reduce, remove or avoid greenhouse gas emissions. Ten sectors have been approved: energy, industries, agriculture, waste handling and disposal, forestry, transport, fugitive emissions, construction, solvent use, and CCUS and others.
| Carbon Market Model | Design | Lesson for India |
|---|---|---|
| EU ETS | Cap-and-trade with absolute cap; launched in 2005; now complex and multi-sectoral. | Avoid oversupply of offsets and manage carbon leakage concerns carefully. |
| Korea ETS | Cap-and-trade since 2015 with calibrated free allocation and limited offsets. | Balance competitiveness with climate goals. |
| China National ETS | Intensity-based system covering power, steel, cement and aluminium smelters. | Gradual sector inclusion can be more realistic for emerging economies. |
| India CCTS | Baseline-and-credit system with compliance and offset mechanisms. | Uses PAT experience and aligns carbon market with industrial transition. |
Carbon markets should be designed gradually. Excessive free allowances, weak monitoring or excessive offset use can reduce effectiveness. India’s approach is cautious and industry-linked.
Mission LiFE: Behavioural Foundation of Climate Policy
Mission LiFE, Lifestyle for Environment, was introduced at COP26 in Glasgow in 2021. It connects individual and community behaviour change with climate action and is an integral part of India’s Nationally Determined Contribution.
The chapter says that most climate-oriented schemes in India already reflect Mission LiFE principles because they combine government intervention with behavioural and lifestyle shifts at household, community and enterprise levels.
Reducing wasteful use of energy, water and materials.
Waste reduction, recycling, reuse and extended producer responsibility.
Climate action becomes a daily behaviour, not only a government programme.
Behavioural change reduces emissions and strengthens local resilience.
Schemes Aligned with Mission LiFE
| Scheme / Initiative | Mission LiFE Link |
|---|---|
| UJALA | Mass LED adoption reduces energy consumption. |
| Standards and Labelling | Encourages energy-efficient appliance choices. |
| PAT Scheme | Promotes industrial energy efficiency. |
| NAPCC Missions | Promote conservation, resource efficiency and community participation. |
| Waste to Wealth in Odisha | Transforms waste into value-added products and livelihoods. |
| Solid Waste Management | Links behaviour, local institutions and circular economy. |
Mission LiFE shifts climate action from “policy targets” to “people’s participation”, making sustainability a social norm rather than only a technological transition.
Climate Finance: The Binding Constraint
The chapter states clearly that climate finance remains the biggest constraint for developing countries. By 2030, developing economies are estimated to need USD 5-6 trillion for climate action. The sustainable development financing gap is around USD 4 trillion annually.
India’s Climate Finance Position
India has reduced emissions intensity by 36% since 2005 and achieved 50% non-fossil power capacity ahead of schedule, but finance remains skewed towards mature sectors like solar, wind and energy efficiency. Adaptation, MSMEs, urban infrastructure and hard-to-abate sectors remain underfunded.
India’s Sustainable Finance Milestones
SEBI disclosure norms for issuance and listing of green bonds.
BRSR introduced by SEBI for top 1,000 listed companies.
Framework for Sovereign Green Bonds by Ministry of Finance and sustainable lending guidance by IFSCA.
BRSR Core and RBI framework for acceptance of green deposits.
SEBI framework for ESG debt securities and revised BRSR Core for ease of doing business.
Municipal Green Bonds
| Municipal Corporation | Date | Amount Raised | Use of Proceeds | Tenure |
|---|---|---|---|---|
| Vadodara | Feb 2024 | ₹100 crore | Water treatment | 5 years |
| Ahmedabad | Feb 2024 | ₹200 crore | Water treatment | 5 years |
| Indore | Feb 2023 | ₹244 crore | Solar plant | 3 to 9 years |
| Ghaziabad | May 2025 | ₹150 crore | Sewage treatment | 4.02 to 10.02 years |
MDB Reform and International Climate Finance
The chapter argues that the problem is not lack of global capital but lack of risk appetite and structural bias in international finance. Multilateral Development Banks must move from “originate-to-hold” to “originate-to-share”, using guarantees, insurance and blended finance to attract private capital.
Climate finance should not be counted merely as private investment. Under Article 9.1 of the Paris Agreement, developed countries have an obligation to provide financial resources to developing countries in line with equity and CBDR-RC.
Environmental Regulation: From Command-and-Control to Trust-Based Governance
Environmental regulation corrects pollution as a negative externality. Earlier regulation relied mainly on command-and-control standards, but India is increasingly moving towards market-based, risk-based, technology-enabled and outcome-oriented governance.
Evolution of Environmental Regulation in India
Water Act established the institutional foundation for pollution control and State Pollution Control Boards.
Water Cess Act enabled levy on polluting and water-intensive industries based on water consumption.
Environment Protection Act became umbrella environmental legislation after the Bhopal Gas Tragedy.
EIA Notification institutionalised prior environmental clearance through screening, scoping, public consultation and appraisal.
National Green Tribunal strengthened enforcement and environmental scrutiny.
PAT scheme introduced tradable Energy Saving Certificates.
CCTS framework created India’s carbon market architecture.
Environment Audit Rules, PARIVESH 3.0, contaminated sites rules and rationalised green belt norms strengthened regulatory modernisation.
Recent Environmental Governance Reforms
| Reform | What It Does | UPSC Meaning |
|---|---|---|
| PARIVESH 3.0 | Single-window digital platform for environmental clearances and post-approval monitoring. | Ease of doing business with environmental safeguards. |
| Environment Audit Rules 2025 | Introduces certified third-party environmental auditors. | Improves monitoring credibility and reduces procedural burden. |
| Updated Industry Classification | Red, Orange, Green, Blue and White categories based on pollution potential. | Risk-based regulation. |
| Critical Mineral Mining Streamlining | Regulatory simplification for critical, strategic and atomic mineral mining projects. | Supports energy transition supply chains. |
| Afforestation and Green Credit | Encourages participation in compensatory afforestation and degraded forest restoration. | Ecosystem restoration and green incentives. |
| EPR Frameworks | Digital portals for waste streams such as plastic, battery, e-waste, tyres, used oil, vehicles and C&D waste. | Circular economy governance. |
| SUP Ban | 12 single-use plastic items banned from 1 July 2022. | Plastic pollution control. |
| Jan Vishwas Act Amendments | Decriminalised minor offences and increased compensation for industrial accidents. | Trust-based governance and ease of living. |
Extended Producer Responsibility and Circular Economy
Circular Economy Action Plans cover 10 waste categories. EPR portals had 69,116 producers and 4,377 recyclers registered as on 14 November 2025. Around 308 lakh tonnes of waste was recycled with corresponding EPR certificate generation of 296.53 lakh tonnes.
Environmental governance in India is shifting from permission-heavy control to digital, risk-based and outcome-oriented regulation. The challenge is to maintain environmental integrity while improving predictability and reducing compliance burden.
Conclusion: Towards a Green, Resilient and Competitive India
The chapter concludes that climate action is no longer an environmental add-on. It is now a core part of India’s development strategy. Adaptation is central because it protects water security, livelihoods, infrastructure, health and development gains.
India’s mitigation strategy is pragmatic. It expands renewables, energy efficiency, nuclear energy, green hydrogen, carbon sinks and carbon markets while protecting energy security, affordability, industrial competitiveness and job creation.
Climate finance remains the binding constraint. Domestic finance is important, but not sufficient. MDB reform, concessional finance, risk-sharing instruments and predictable international support are essential for equitable climate action.
Adaptation, SAPCCs, local institutions and ecosystem restoration protect development gains.
Energy security, critical minerals, nuclear and clean manufacturing support industrial growth.
Mission LiFE, renewable energy, carbon markets and circular economy reduce environmental pressure.
Finance and technology support are necessary for fair climate ambition in developing countries.
India’s climate pathway is anchored in development realism. It integrates resilience, competitiveness and sustainability, demonstrating that economic growth and environmental stewardship can advance together rather than in opposition.
UPSC Prelims, Mains and Essay Takeaways
- Mission LiFE was introduced at COP26 in Glasgow in 2021.
- India’s per capita GHG emissions are 2.9 t/person versus global average of 6.7 t/person.
- Adaptation spending rose from 3.7% of GDP in FY16 to 5.6% in FY22.
- India’s non-fossil installed capacity reached 51.93% by December 2025.
- India ranks fourth globally in total installed renewable energy capacity.
- CCTS was adopted in June 2023.
- National Critical Mineral Mission has ₹16,300 crore outlay.
- Sovereign green bond issuance reached ₹72,697 crore since FY23.
- Development itself is a form of adaptation for vulnerable societies.
- Climate transition must be sequenced with grid readiness and storage capacity.
- Adaptation should be mainstreamed into planning, finance and local governance.
- Climate finance is constrained by global risk perception and financial architecture.
- Critical minerals are strategic chokepoints in the global energy transition.
- Environmental regulation can support both sustainability and ease of doing business.
- Development-driven climate action.
- Mission LiFE and behavioural change.
- Energy security in a low-carbon transition.
- Climate finance and global equity.
- Adaptation as protection of development gains.
- Green growth, resilience and competitiveness.
Key Terms Explained
| Term | Simple Meaning | UPSC Use |
|---|---|---|
| Adaptation | Actions that reduce vulnerability to climate impacts. | Disaster resilience, agriculture, water and health. |
| Mitigation | Actions that reduce emissions or enhance carbon sinks. | Renewables, efficiency, carbon markets. |
| Mission LiFE | Lifestyle for Environment, promoting sustainable behaviour. | Behavioural climate action. |
| SAPCC | State Action Plan on Climate Change. | State-level climate planning. |
| CCTS | Carbon Credit Trading Scheme. | India’s domestic carbon market. |
| CCC | Carbon Credit Certificate denominated in tonnes of CO2 equivalent. | Carbon trading mechanism. |
| Greenium | Yield advantage of green bonds over comparable conventional bonds. | Climate finance and bond markets. |
| NCMM | National Critical Mineral Mission. | Critical minerals and energy security. |
| SHANTI Act | Nuclear energy reform law of 2025. | Nuclear energy and private participation. |
| PARIVESH 3.0 | Single-window digital platform for environmental clearances. | Environmental governance reform. |
Internal Links for UPSC Economy and Environment Preparation
Continue your preparation with the Economic Survey 2025-26 complete summary for UPSC. You can also use these related IASment study sections:
- Previous Chapter: Economic Survey 2025-26 Chapter 9 Investment and Infrastructure
- UPSC Economy Notes for concept clarity.
- UPSC Prelims Economy Strategy for MCQ-focused preparation.
- UPSC Mains GS Paper 3 Economy Notes for analytical answer writing.
FAQs on Economic Survey 2025-26 Chapter 10
What is Economic Survey 2025-26 Chapter 10 about?
It is about India’s environment and climate change strategy, covering adaptation, mitigation, Mission LiFE, renewable energy, nuclear energy, battery storage, critical minerals, carbon markets, climate finance and environmental regulation.
Why is this chapter important for UPSC?
This chapter is important for GS Paper 3 because it covers environment, climate change, sustainable development, energy transition, disaster resilience, conservation, climate finance and environmental governance.
What are the most important facts from this chapter?
Important facts include India’s per capita GHG emissions of 2.9 t/person, non-fossil installed capacity of 51.93%, FY26 renewable energy addition of 38.61 GW, NCMM outlay of ₹16,300 crore and sovereign green bond issuance of ₹72,697 crore since FY23.
Why does the chapter say development is adaptation?
Development improves health systems, infrastructure, agriculture, energy access and income security. These reduce vulnerability to climate shocks, so development itself strengthens climate resilience.
What is Mission LiFE?
Mission LiFE means Lifestyle for Environment. It promotes behavioural change, sustainable consumption, circularity and citizen participation in climate action.
What is India’s approach to renewable energy?
India is scaling renewables but stresses the need for storage, grid stability, baseload power, nuclear energy and affordability so that the transition remains reliable and development-compatible.
What is the Carbon Credit Trading Scheme?
The Carbon Credit Trading Scheme is India’s carbon market framework. It includes a compliance mechanism for obligated entities and an offset mechanism for voluntary emission reduction projects.
What is the final message of the chapter?
The final message is that India’s climate action is based on development realism: resilience, competitiveness, energy security and sustainability must advance together.
Official Source and Chapter Navigation
For the official document, refer to the Official Economic Survey 2025-26 source.
This IASment page is a UPSC-oriented educational summary prepared for revision, conceptual clarity and exam use.