India’s ambitious climate commitments require closer alignment between fiscal policy and climate and environmental outcomes. Public financial management (PFM), particularly budgeting and procurement, offers significant yet underutilised potential to drive this alignment. While the Ministry of Finance (MoF) has released a draft Climate Finance Taxonomy with a final version expected soon, India currently lacks a comprehensive framework that connects green budgeting, adaptation, resilience, green public procurement, and taxonomy-based project classification. While these instruments have largely been developed internationally with mitigation in mind, this work will place specific emphasis on adaptation, alongside other objectives. This linking presents a transformative opportunity to redirect both existing and new public expenditures toward climate-resilient outcomes, improve fiscal accountability, and help unlock green finance. The evolving complexity of the taxonomy and the introduction of complementary policy instruments will necessitate continuous technical engagement and sustained capacity building for which a “learning-by-doing” approach will be critical.
The study will develop an integrated framework linking climate budget tagging, green public procurement (GPP), and the climate finance taxonomy. It will assess how these instruments can impact adaptation-specific budget allocation, economic benefits, climate outcomes, resilience, and access to climate finance through modelling and ‘what-if’ scenario building. The study will also translate this framework into practical technical toolkit and build institutional capacity to operationalise taxonomy-based green budgeting and procurement.
