The year 2026 started with India's cities under climate stress in ways no policy document could have predicted. Winter power demand on two occasions has already overtaken summer peaks. Delhi's air quality swings between very poor and hazardous.
In Mumbai, as BMC elections concluded on January 15, voters made their priorities unmistakable: flooding, air pollution, potholes, traffic, and delayed redevelopment. Chennai is managing rain alerts. Bengaluru's land temperature has climbed 6 degrees in four years.
These are not weather reports. They are signals about how India's cities carry the weight of climate disruption, yet their institutions, infrastructure, and finance systems were never designed for this scale of challenge.
When we started Project Mumbai in 2018, we had a simple conviction: when citizens, government, and private sector come together, change follows. We have seen it work in mental health, waste management, and community care. The world witnessed it during Covid. Now, as we prepare for the inaugural Mumbai Climate Week on February 17-19, we are bringing that same spirit to climate action. Because the climate crisis is too complex for any single actor. It demands a response where the state, market, and citizens move together.
Budget 2026 has an opportunity to build exactly that kind of connective architecture for climate finance. One that goes beyond centrally prescribed schemes with frameworks that empower cities to design, finance, and deliver resilience at the local level.
The Finance Gap and What It Actually Means
India needs roughly $300 billion annually through 2030 to stay on a credible climate path. Cities contribute 63% of our GDP today and will house 951 million people by 2050. They sit at the center of where that need exists. Yet the finance systems we have built rely heavily on scheme-based grants with tied conditions. They were designed for infrastructure delivery, applicable when both the problem and its solution were clearly defined.
Climate adaptation is different. Flooding in Mumbai looks different from a water-logged Patna. Rising temperatures in Ahmedabad play out differently from the heat in Bengaluru. Cities need flexibility to innovate. They need predictable, long-term finance tied to outcomes. And they need fiscal autonomy to raise revenue and make investments that match their unique vulnerabilities.
Last year's budget created the Rs 1-lakh-crore Urban Challenge Fund. That was an important signal. Cities need catalytic capital to unlock bonds, loans, and private investment. But a framework is only the beginning. What comes next will determine whether India's urban transition becomes a story of resilience or of lost momentum.
Three Shifts That Could Unlock City-Level Climate Finance
The first shift is moving from prescriptive inputs to outcome-based results. Right now, most municipal climate spending comes through schemes that specify exactly what cities must build. What if instead the Centre set clear benchmarks and let cities figure out how to meet them? Reduce flood losses by X percent. Bring heat-related mortality down by Y. Improve air quality by Z. Reward the cities that deliver.
Results-based financing has worked in energy, sanitation, and health. It aligns incentives, rewards efficiency, and lets cities design solutions that fit their context. Several global cities have piloted this successfully. India's urban ecosystem is ready.
The second shift is unlocking green bond markets for municipal borrowing. India has issued 50 municipal bonds since 1997, totaling ₹6,933 crore. Only four in the last decade were labeled green. Yet 60% of recent municipal bonds could have qualified for green labeling. That represents untapped access to climate-focused investors and lower borrowing costs.
Budget 2026 can accelerate this through tax exemptions on interest income from certified green municipal bonds. Extend this to retail investors so ordinary citizens back their city's climate transition. For smaller cities that lack credit ratings, a guarantee facility can de-risk early issuances. States like Maharashtra, Tamil Nadu, Gujarat, and Karnataka can issue pooled green bonds that aggregate projects from multiple cities, reducing costs and enabling tier-2 and tier-3 cities to access capital markets.
The third shift is making climate data public and standardized. You cannot invest in what you cannot measure. Yet fewer than 30 Indian cities publish regular climate action updates. Globally, 611 cities reported to CDP in 2024, seeking $86 billion in climate finance. India's cities are largely invisible to that capital flow.
Budget 2026 can introduce voluntary disclosure frameworks with incentives for cities that report climate vulnerability, adaptation spending, greenhouse gas inventories, tree cover, drainage capacity, and air quality trends. The National Geospatial Mission can host this, integrating flood zones, heat islands, groundwater stress, and pollution layers into an accessible platform. When data becomes transparent, finance follows.
Beyond Finance: The Architecture We Need
At Mumbai Climate Week, we will bring together the government, investors, developers, startups, communities, and citizens to work on these challenges. The themes are Urban Resilience, Food Systems, and Energy Transition. But the underlying question is the same: how do we build systems where the state, market, and citizens move together?
Through Project Mumbai's work, I have seen that the smartest city is useless without the engaged citizens. You can legislate against pollution, but you cannot police every street corner. True enforcement comes from community ownership. That is why the most interesting climate conversations are happening in colleges and neighborhood gatherings, in films and on WhatsApp groups, not just conference halls. Through Climate & Cinema screenings organized around the city to a Citizens Speak Corner during the main event — each of these will find a space and a voice at the Mumbai Climate Week.
The underlying reality is that climate finance is not a line item. It is economic infrastructure. Flood losses cost India $4 billion annually. Without action, that rises to $30 billion by 2070. Heat, air pollution, and water stress are already constraining productivity and liveability. The fiscal instruments exist. Bonds, guarantees, blended funds, outcome contracts. The institutions exist. Municipal corporations, state governments, development banks, private investors.
Currently under development is the network designed to direct financial support to the places where climate change is having the greatest effects. Budget 2026 can accelerate this. Not by prescribing solutions from the Centre, but by creating frameworks that empower cities to lead. Not by replacing markets, but by de-risking investments that would not otherwise flow. Not by bypassing communities, but by making citizens co-creators of resilience.
India's cities are becoming test beds for climate adaptation in the Global South. If we get this right in Mumbai, Delhi, Chennai, and Bengaluru, those models will matter in Dhaka, Lagos, Jakarta, and Manila. We share the same density, the same infrastructure challenges, the same urgent vulnerabilities. If we solve for resilience here, we create a blueprint that works for half the planet.
Budget 2026 is a signal about where India is headed. Does our finance architecture recognize that the climate crisis is urban? Does it give cities the tools to lead? Does it align capital with resilience?
The answers will shape whether India's urban future becomes a story of growth alongside resilience. We are betting it can be both, if we build the right architecture now.
Shishir Joshi is the founder and CEO of Project Mumbai, the organization convening the Mumbai Climate Week.
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