risk avoidance, risk mitigation, risk sharing and risk transfer may not be fully effective as the financial and other risks from climate change wouldn't materialise in part or on individual basis but manifest and impact collectively in a region or industry. traditional instruments like insurance alone may not be enough to manage the risks arising from such an all - encompassing crystallisation of risks and can overwhelm the insurers. therefore, we have to acknowledge that risk emanating from climate change cannot be handled by one set of actors alone. it needs a buy in from all stakeholders and to ensure a successful transition to a sustainable future, we need a multi - faceted approach that involves governments, private sector entities, financial institutions, civil society organisations and the public. climate vs growth - concept of'just transition'proposals for tackling climate change and containing global temperature sometimes give rise to contradictory views as pro - climate actions are perceived to compromise on economic growth and employment. however, the need to act is immediate and in a calibrated manner. we cannot afford to procrastinate. the rising temperatures and climate events are already inflicting huge financial costs and causing irreparable damage to ecosystem. if we start early, the cost of transitioning to a more sustainable future would be lower and spread out over a longer time horizon. therefore, i believe that early work on mitigating the climate risk would support the longterm growth. the investments in climate action would pay - off well in the medium and long - term. the important point here is that the short - term impacts should not be disproportionate to some countries in the sense that they should not be worse - off during the transition process. therefore, there is a need for more channelising of climate finance to emdes and firm and abiding commitments on climate funds from advanced economies to help emdes in the transition process is very important. adaptation and transition are key strategies in managing climate risks. however, the transition must be swift, equitable and just, without putting undue burden on developing and underdeveloped economies. we also need to address the elephant in the room which is how to finance the transition towards a low carbon economy. given the 3 / 6 bis - central bankers'speeches significant funding gaps and huge financing requirements of emdes ( estimates range from 2. 5 per cent of gdp annually in case of india and at $ 2 trillion per year by 2030 for em

rajeshwar rao : climate change – the emerging challenge remarks by mr rajeshwar rao, deputy governor of the reserve bank of india, at the j p morgan india leadership series lecture, mumbai, 19 july 2024. * * * good afternoon ladies and gentlemen, at the outset, let me thank the organisers for inviting me to deliver this address and convey my thoughts at this prestigious event. we, as central bankers, interact with various stakeholders on different occasions and diverse gatherings like this provide us an opportunity to reflect on issues which straddle not just the world of finance but also impinges on wider scheme of things. the idea is to flag issues which have wider ramifications beyond the conventional financial risks. therefore, while i would dwell upon the indian financial outlook, i would like to avail of this opportunity also to discuss on the issue of climate change and the role of financial entities in the transition process towards a more sustainable growth. indian banking and financial sector outlook the global financial system is facing strong headwinds from various quarters, including high levels of public debt, stretched asset valuations, economic and financial fragmentation, geopolitical tensions, and risks arising from increasing cyber threats. amidst these global challenges, the indian economy is an outlier which shows strong macroeconomic fundamentals. economic activity is growing steadily, supported by a financial system that looks stronger than in the past. if we exclude post - covid rebound in 2021 - 22, india's real gdp growth in 2023 - 24 surged to its highest since 2016 - 17, surpassing expectations. the period marked a shift in growth trajectory from an average of 7 per cent pre - 20201 to an average of 8 per cent or higher during the subsequent period, driven largely by domestic factors. inflation is currently forecast to average around 4. 5 per cent in 2024 - 25 and 4. 1 per cent in 2025 - 26 2. these macroeconomic conditions could, therefore, lay the foundation for sustainable future growth, improve consumption conditions, strengthen the investment climate, and enhance external competitiveness. the indian banking sector, in particular, has demonstrated significant improvement in key metrics such as capital adequacy, asset quality, and profitability, supported by robust macroeconomic fundamentals and business confidence. there has been sustained growth in credit expansion, primarily driven by personal loans and loans to services sector. as of the end of march 2024, scheduled commercial banks ( scbs ) reported a capital to risk - weighted