Greening the Growth Story: An Analysis of India's Budgetary Allocations for Sustainable Development

This research measures India's public-sector green-finances FY 2015 to 2025 macro-economic payoff quantitatively. Annual Union-Budget expenditures on Clean Energy, Energy Efficiency, and Sustainable Transport are compiled and as a percentage of nominal GDP (GF_GDP per cent). The study ensures each series is stationary using Augmented-Dickey–Fuller and KPSS tests and then use an Engle–Granger two-step cointegration approach complemented by Fully Modified OLS and Dynamic OLS estimators. The residual ADF statistic (-4.12) rejects the hypothesis of a unit root, which creates a stable long-run relationship between GF_GDP per cent and real GDP. FMOLS provides a long-run elasticity of 0.121 (p < 0.01), so a 1 per cent increase in the green-finance portion of GDP increases real output by 0.12 per cent. An error-correction model indicates that 46 per cent of the short-run disturbances from equilibrium are corrected annually and that first-difference shocks to green consumption maintain a positive short-run effect (elasticity ≈ 0.05). During the sample duration, GF_GDP per cent increased at a compound average rate of approximately 28 per cent, four times that of GDP, highlighting a more expansionary fiscal policy direction towards sustainability. The study conclude that ongoing and ideally stepped-up green budgeting can also contribute to India's climate pledge and boost economic growth, lending empirical evidence towards integrating climate-conformity fiscal actions within medium-term macroeconomic planning.