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Green resources to colour GDP
The Economic Times
June 11, 2009

New Delhi: India is expected to begin the greening of its national income accounting starting next year, making depletion in natural resources wealth a key component in its measurement of gross domestic product (GDP).

The ministry of statistics and programme implementation is now readying a national database to calculate the cost of depletion of natural resources in the process of economic expansion, a government official said.

"Research outfits from various states are pitching in to form a national database of natural resource accounting (NRA) which should be ready next year. Once it is in place we can calculate the cost of recovery of polluted resources, which has to be used as a deflator to real GDP. Our green GDP may be significantly lower than real GDP as economic growth is resource-intensive," an official in the statistics ministry said.

China carried out a similar exercise by publishing its Green GDP for 2004, showing economic losses because of environmental damage at about 3% of national income. But the experiment proved to be short-lived: squabbling between government agencies and loss of support for the idea from political establishment forced its abandonment.

Green GDP gains currency

"The concepts of NRA and Green GDP have for long been debated by economists mainly due to a lack of consensus on how natural resources should be valued. But with traditional indicators of growth such as GDP being increasingly considered inadequate, these concepts are gaining acceptance," an official of the ministry of new and renewable energy said.

The Energy and Resources Institute (TERI) executive director, Leena Srivastava, said that if the country is depleting natural resources for the economic growth now, it is more of a liability than an asset. "Green GDP will help take stock of not just the current scenario, but provide a long-term perspective," the official said.

There are several other countries that calculate Green GDP, and developed nations also submit annual reports on greenhouse gas emissions to the United Nations Framework Convention on Climate Change. Over the past two years, India has submitted such data based on the all the sources of fossil fuels that contribute to emissions.

"A Green GDP would definitely be a further step ahead and help the nation monitor the uses and impact of natural resources for the sake of development," consulting firm KPMG’s associate director Arun Kumar said.

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