India An important partner in international cooperation
In order to expand their cooperation on these global issues, Germany and India concluded a Green and Sustainable Development Partnership in May 2022. The Federal Ministry for Economic Cooperation and Development (BMZ) had a major role in shaping this Partnership, which guides its entire development cooperation with India.
India is a country of extreme contrasts. On the one hand there is a booming digital economy, an ambitious space programme, a growing renewable energy sector and forward-looking models for climate-smart smallholder agroecology. On the other hand, India has the world's highest number of people living in extreme poverty, antiquated industrial plants, the third-highest emissions of greenhouse gases after China and the US, and a very resource-intensive industrialised agricultural sector.
According to the 2022 Global Multidimensional Poverty Index (External link) (MPI), the incidence of poverty in India fell from 55 per cent in 2005 to about 16 per cent in 2021. The MPI is published jointly by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI). It measures poverty based on various indicators relating to education, health and living standards. According to the MPI, there was a strong improvement in the living conditions of more than 400 million Indians during the aforementioned period.
However, although the number of people who count as middle or upper class is growing, there were still approximately 180 million people in 2022 who had to get by on the equivalent of less than 2.15 US dollars a day. The COVID-19 pandemic and its consequences have caused a renewed increase in unemployment and poverty, especially among disadvantaged groups.
Reducing poverty and social inequality along with dealing with the consequences of climate change and protecting natural resources are the biggest challenges for the country's policymakers, economy and society.
German development cooperation with India
India is one of the BMZ's “global partners”. The two countries have a substantial portfolio of joint development cooperation activities based on strong mutual trust that they are carrying out with great success. This cooperation is embedded in a challenging dialogue between equal partners.
With the Green and Sustainable Development Partnership that was signed by Prime Minister Narendra Modi and Federal Chancellor Olaf Scholz on 2 May 2022, Indo-German cooperation has been placed within a broader framework and has been systematically aligned with the United Nations 2030 Agenda and the Paris Agreement.
The Partnership is intended to strengthen bilateral cooperation in line with the climate goals and the Sustainable Development Goals, and to help broaden cooperation with multilateral players, academia, the private sector and civil society. Germany is planning to provide at least ten billion euros for this in the period up to 2030.
The BMZ has been the lead German ministry in driving this partnership forward together with the German Environment Ministry and is supporting India with more than one billion euros a year. Over 90 per cent of all BMZ projects in India contribute towards climate change mitigation or adaptation and resilience.
The German government wants to assist India, in particular, in accelerating the expansion of renewable energy, improving energy efficiency and achieving a just coal phase-out.
Support for India's reform efforts
For its cooperation with global development partners like India, the focus of the BMZ is on programmes with a structural impact. These programmes and projects build on India's own efforts and reform programmes; they are carried out, wherever possible, in cooperation with the EU or other EU member states, the G7 or multilateral partners. They provide model solutions, help to build capacity, and thus enable the participating partners to carry on with the projects on their own and expand them.
At the government negotiations in November 2022, Germany made a commitment to India for funding worth about one billion euros. Most of this amount, namely 0.9 billion euros, is intended for Financial Cooperation. Most of this funding will be provided as loans from KfW Development Bank at reduced rates, to be paid back with interest by India.
The following priority areas have been agreed by the two governments for their programme of collaboration:
- Renewable energy, energy efficiency
- Sustainable urban development and climate-friendly mobility
- Climate resilience, agroecology and conservation of natural resources
SDG trends for India
- On track or maintaining SDG achievement
- Moderately improving
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