Sustainable finance in Indian national accounts looking ahead through the lens of BPM7 and 2025-SNA

Mitigation of climate risks is now an area of responsibility and a key concern for economic policymakers, impacting macroeconomic policy in many countries across the globe. National accounting and Gross Domestic Product (GDP) compilation, which earlier could not address climate-related risks, the valuation of natural assets, and the consequent depreciation or destruction of valuable resources is taking shape in the form of the 2025-System of National Accounts (SNA), which aims to make GDP a comprehensive and inclusive measure of these vital omissions. National Accounts overlap significantly with the Balance of Payments, and therefore, it is natural that the updating of the SNA is proceeding in parallel with an update of the sixth edition of the International Monetary Fund (IMF)'s Balance of Payments (BoP) and the International Investment Position (IIP) Manual (BPM6) to BPM7. While the 2025-SNA and Balance of Payments Manual (BPM7) step towards a sustainable human future, the implementation in countries across the globe will continue to remain a challenge in the foreseeable future.

This paper focuses on the Indian economy and makes four distinct contributions with a focus on sustainable finance. Firstly, it provides a comprehensive preview of the upcoming 2025-SNA and BPM7, relating them to the main Guidance Notes (GNs) of 2025-SNA and BPM7. Secondly, the paper takes stock of the regulatory framework and data and assesses the readiness of India to adapt to these new guidelines. Thirdly, it highlights five major potential implementation issues. Finally, it critically assesses the relevant section of the BPM7 for its adequacy for a sustainable global future.

To sum up, this paper provides a discussion on the compilation of sustainable finance statistics as per the upcoming 2025-SNA and BPM7 guidelines, as understood from the GNs and the annotated outlines, with a special focus on its relevance to external sector statistics. This research will contribute to further strengthening India's position to reach various climate goals.