Green Accounting in India: Meaning, Purpose, Types, Significance

Green Accounting: India is facing environmental challenges like air pollution, deforestation, and loss of biodiversity. But these issues rarely get recorded in economic data. That’s where Green Accounting in India comes into play. It adds the value of natural resources and environmental costs to the traditional accounting systems. Green Accounting helps in better planning and sustainable growth.

What is the Meaning of Green Accounting?

Green Accounting, also called environmental accounting, means tracking a country's natural resources and environmental impact as part of its national accounts. Unlike traditional accounting, it includes environmental costs, resource depletion, pollution, and other ecological changes.

In short, Green Accounting calculates the value of forests, water, minerals, air quality, and land, and then subtracts the environmental damage from GDP growth. This way, it shows the real picture of economic development in the country. 

Green Accounting is important because GDP alone does not show how natural resources are used or misused. For example, if forests are cut to increase GDP, the loss of trees and the climate impact are not shown in standard accounting. But Green Accounting in India will capture this loss and help in better decision-making.

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Purpose of Green Accounting

The main purpose of Green Accounting in India is to measure real development by giving value to nature and showing the hidden costs of economic progress. Here are some of its key purposes:

• It tracks how much nature contributes to the economy.

• It shows the real cost of pollution, land degradation, and resource loss.

• It helps governments design better and more sustainable policies.

• It supports long-term planning for natural resource management.

• It makes people and industries more responsible towards the environment.

Types of Green Accounting 

Green Accounting is not just one single method. It has different types based on what is being measured. Here are the major types:

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Green Accounting in India

Green Accounting in India is a step toward linking the environment with economic policies. The Government of India and the Ministry of Statistics and Programme Implementation (MoSPI) have taken several initiatives in this area. India has developed the Natural Resource Accounting (NRA) framework based on the UN’s System of Environmental-Economic Accounting (SEEA).

MoSPI, in collaboration with international bodies like the World Bank, has launched pilot projects in states such as Himachal Pradesh and Karnataka. These studies measure water, forest wealth, air quality, and biodiversity. Green Accounting in India helps states track the true cost of development.

Many Indian policies, like the National Green Tribunal (NGT) and the Compensatory Afforestation Fund, also reflect this approach. India is slowly moving towards making Green Accounting a regular part of national planning. This shift is crucial for environmental sustainability and the health of future generations.

Green Accounting in National Income

India’s current national income calculations are based on GDP and Gross National Product (GNP). These figures measure income from industries, services, and agriculture. But they ignore the cost of pollution, climate change, and resource loss.

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Incorporating Green Accounting into the National Income tries to fix this gap. It adjusts the GDP by adding environmental services and subtracting environmental damage. This leads to a new measure called Green GDP.

For example, if a state gains ₹10,000 crores from mining but loses ₹3,000 crores worth of forest and air quality, Green GDP would be ₹7,000 crores. This way, Green Accounting gives a more accurate and complete picture of economic growth and helps in recognising how much nature contributes to the economy. 

Significance of Green Accounting

The significance of Green Accounting in India lies in its ability to bring the environment into the centre of economic discussions. While traditional GDP ignores damage done to nature, Green Accounting includes both gains and losses. Here’s why Green Accounting is so important:

• It gives a realistic view of economic growth.

• It improves the quality of policymaking by including environmental costs.

• It promotes sustainable development.

• It helps track climate change impact and biodiversity loss.

• It encourages industries to reduce pollution and become eco-friendly.

For India, which depends heavily on natural resources, Green Accounting is essential. Forests, rivers, minerals, and fertile lands must be protected. By using Green Accounting in India, planners can ensure growth that respects both people and nature.

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