Introduction

Nations across the world have committed to the Paris Agreement on Climate Change and the Sustainable Development Goals (SDGs), which implies the urgency of protecting the human society, economy, and environment from the negative consequences of rapid industrialization and urbanization. The global commitments guide the domestic policies, which further influence every organization. The recently concluded Conference of the Parties (COP) 26, where world leaders gathered to deliberate on mechanisms to prevent the impending climate catastrophe, emphasized the urgent need to deliver action on the Paris Agreement and make net zero commitments a norm. In this context, India has taken the lead, with Prime Minister Narendra Modi setting five ‘Amrit Tatva’ (Nectar Elements) on non-fossil energy capacity, emission reduction, carbon intensity, and a net zero target year.

India faces numerous development challenges, such as one-fifth of the population still living below the poverty line and a significant share of the population not having access to safe drinking water, clean cooking fuel, and all-weather roads. Owing to the limited financial and natural resources, pursuing twin goals related to socio-economic development such as poverty and climate change such as adaptation and emission mitigation requires strategic planning. The trade-offs and synergies involved in the process need to be identified for framing suitable policies. Policymakers need to make investments prudently that help meet the goals of high economic growth and decarbonization simultaneously. For example, a coal phase-out is required to reduce national emissions; however, this transition can have possible repercussions on entrenched businesses such as job losses or financial and socio-economic risks. Governments, companies, and society need to work together to surmount this dilemma.

Introduction

India's independence marked a significant turning point in its economic history. As a result of British-led deindustrialization, the nation had suffered acute deprivation. According to historical statistics compiled by historian Angus Maddison, India's share of global income fell from 22.6 per cent in 1700 (almost equal to Europe's 23.3 per cent) to 3.8 per cent in 1952. Following independence, India had the difficult task of methodically organizing its economy. It was a tremendous task to overcome centuries-old disparities in resources and development. Economic planning was effective in command economies such as the Soviet Union and East European nations, and it was viewed as a way to address market failures (such as those experienced during the Great Depression in the 1930s). Economic planning was a logical choice for many newly independent developing countries because it allowed states to deploy resources and achieve prioritized goals within set time constraints (Sebak, 2023).

Sectoral composition of GDP of India (per cent)

The sectoral composition of India's GDP has undergone significant transformation over the decades (Figure 8.1), reflecting the changing dynamics of the Indian economy. In the 1950s, agriculture played a dominant role, contributing to over half of the GDP at 55.4 per cent. However, as the country embarked on economic reforms and modernization efforts in the 1960s and subsequent decades, the agriculture sector's share steadily declined. By the 1990s, it had dropped to 30.9 per cent. This shift was accompanied by a remarkable rise in the industrial sector's contribution, from 14.8 per cent in the 1950s to 23.3 per cent in the 1990s. The services sector, encompassing a wide range of industries such as finance, information technology, and healthcare, saw substantial growth evolving from 29.8 per cent in the 1950s to a dominant 61.5 per cent of the GDP in 2021.

Introduction

The ‘hybrid’ modelling method can help bridge the traditional gap between top-down and bottom-up approaches for deriving low-carbon pathways. However, this involves considerable effort in building the reconciled national accounts and energy balance data. Moreover, the documentation on the required process for deriving ‘hybrid’ data has not been done yet. This chapter outlines the steps to be followed for constructing a hybrid input–output table (IOT).

The model-building capacity requires the construction of a hybrid dataset that will be further used for calibrating the model and generating future pathways. So this chapter outlines the first step of data hybridization in the modelling exercise. Accounting matrices constructed in the past were mostly aggregated in nature with hardly any energy system details.

However, this method does not take into account three factors (Figure 3.1). First is the heterogeneity in energy prices. Earlier, the databases considered one energy price for all the sectors, conveniently ignoring the fact that there are significant differences across sectors. For instance, the Indian government charges different electricity rates to households, agricultural consumers, and commercial firms. Similarly, natural gas prices vary depending on the consumer profile.

Second is the dual accounting of energy systems in monetary value and physical units. It is required to integrate the energy and technology information from technology-focused bottom-up models into the national accounts. Hybrid data involves separate matrices for energy prices, energy volumes, and economic expenses, so dual accounting is possible in energy–economy modelling.

Introduction

Transportation has changed significantly throughout the years, starting from the days of animal-drawn carts to today's modernized public transport networks. Excavations at ancient civilization sites have indicated that roadways existed as early as the twenty-fifth to thirty-fifth century BCE. During British colonial rule in India, road networks and transport services were developed for the ease of trading and administration. The advancement of transportation is closely related to the advancement of civilization. With industrialization and urbanization came the need to find new means of transporting people and products from one location to another. Fast settlement of inhabitants in cities and industrial growth drive city expansion. As people reside in areas far from their workplaces, affordable and effective transportation has become one of the necessities of city life. Mechanical energy gradually came to replace animal power. The Calcutta Tramways Company established India's first public transportation system in Calcutta (present-day Kolkata) in 1881, where horses pulled the first tramcars. Steam engines were introduced after a few years to draw tramcars. In 1931, gasoline-powered buses replaced tramcars. Since 1920, public transport by bus has been made available in all major Indian towns. Transportation promotes any country's economic, industrial, social, and cultural growth (Potluri and Tejaswi, 2018).

Transport is a critical piece of infrastructure for the development process. It contributes to a significant portion of India's energy consumption, particularly petroleum products. With economic and population expansion, consumption is anticipated to rise further; increasing industrialization, urbanization, and agricultural development is likely to increase freight and passenger transit; and greater real wages will promote leisure-related travel. Currently

Introduction

A scenario is a narrative that outlines a potential future that helps identify significant events, main actors, and drivers and their motivations and provides insight into the functioning of the world. Building and utilizing scenarios can aid individuals in addressing potential challenges that may be present in future. Scenarios are intuitive, analytical structures that vividly depict potential futures but do not provide consensus or predictions. They describe context and changes but do not dictate user responses. Scenarios serve as a strategic tool for analysing potential policy implications and responses to events, thus providing a common language for discussing current events and exploring future uncertainties for successful decision-making (Shell International, 2008).

Scenarios are compelling, yet challenging, narratives that outline the future, addressing uncertainties and not providing forecasts, projections, or recommendations. Building scenarios involves asking questions, providing answers, and offering guidance for action, aiming to broaden perspectives and highlight key issues. It provides insight into uncertainties and potential consequences, promoting informed and rational decision-making by highlighting potential outcomes of current and future actions. Scenarios explore real-world issues like system dynamics, structural changes, policy choices, technological evolution, and macroeconomic patterns, reflecting the fact that the future situations are influenced by human

actions. However, the age-old drive to contemplate collective possibilities and draw lessons for today remains (Raskin, 2005).

Scenario as solutions

Scenario planning is an imaginative process that involves hypothetically imagining the future, which is considered an innate human activity, allowing us to think about it and plan for it (Hughes, 2009). Scenario building can address real-world problems in various ways, as shown in Figure 7.1.