This DPL to Promote Inclusive Green Growth and Sustainable Development will support the government as it launches transformative actions across its key engines of economic growth – energy, watershed management, industry and tourism. With this Program, the state is expected to make a tangible contribution to the Government of India’s (GoI) objective of reducing the greenhouse gas emissions. Himachal Pradesh is home to three major river basins, and it serves as a watershed that is critical to the livelihoods of more than 200 million people in Haryana, Punjab, Uttar Pradesh and Rajasthan. It is also one of the country’s main sources hydro generation.

The Bank’s Program of support is directed at helping the state adapt and mitigate the effects of climate change; bringing in better policies and practices to guide the development of sustainable hydropower; empowering local communities to conserve their watershed better; promote cleaner methods of industrial production; promote environmentally sustainable tourism; and integrate GIS in decision making.

Hydropower has been identified as one of the key drivers of economic growth in the state. Harnessing the state’s large hydropower potential is a critical low-carbon way to contribute to India’s growing energy demand. The state has ambitious plans for hydropower development of 10 GW over the next ten years. The DPL will help the government make sure that the state’s hydropower program incorporates policies and practices that are environmentally and socially sustainable.

“The aim of this operation is not to support an expansion of hydropower, but to support the adoption of better policies and processes that will make sure that Himachal Pradesh’s hydropower projects are developed in a manner that is environmentally sustainable and also brings benefits to local communities,” said Charles Cormier, Lead Environmental Specialist and Task Team Leader for the Program. “Success by Himachal Pradesh can set examples not only for other Himalayan states in India, but for other countries in the South Asia region.”

The Program will help Himachal Pradesh adopt a river-basin approach in the assessment and management of the environmental risks associated with large-scale hydropower development. This will include conducting cumulative impact assessment for all key river basins; reviewing and monitoring the release of environmental flows from hydropower projects; and drawing up Basin-Level Catchment Area Treatment Plans.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a maturity of 18 years including a grace period of 5 years.