Last year, the UN Intergovernmental Panel on Climate Change report painted a bleak picture for India, warning that the South Asian country could face multiple climate change-induced disasters in the next two decades.

"The risks of climate change may affect food crops and lead to food shortage and decline in food production, besides the possibility of inflation volatility. The macro economy is linked with other factors like inflation. However, the government must move ahead with the correct data," Kumar told DW. India's agricultural sector relies on the monsoon season.

Lekha Chakraborty, professor at the National Institute of Public Finance and Policy, wondered if the central bank has sufficient "Tools" to engage in such new policy objectives, though pointing out it was a good move by the RBI to integrate climate change concerns in its monetary policy stance.

"How will the RBI instruct the top investors to conduct 'green stress tests' and such further details need to be seen in future? Will there be sufficient response from investors also needs to be factored. Having said that, climate change commitments need to be fiscal as well," Chakraborty told DW. At the United Nations Climate Change Conference held last year, India submitted its long-term strategy for low carbon development, which provided a breakdown of initiatives by sector.

Prime Minister Narendra Modi pledged at the Glasgow climate summit in 2021 that India can meet 50% of its energy requirements by increasing its non-fossil energy capacity to 500 gigawatts by 2030. "What is missing is the climate responsive budget statement by the finance ministry in coordination with all sectoral ministries. Climate change public finance management is a crucial sequel to RBI's announcement regarding green taxonomy in India," said Chakraborty.

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