India’s present government is serious about its commitment towards clean energy. The Union Budget 2022-23 tabled by Finance Minister Nirmala Sitharaman was in essence a blueprint for India’s clean energy plan for the next 25 years.
Major funds were allocated towards renewable energy, efficiency, electric mobility and green bonds. The government’s decision to focus on green bonds as the cornerstone of its borrowing programme drew applause from all stakeholders. The funds raised from such bonds will fuel renewable projects that will help India reduce its dependence on carbon fuels.
“As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure,” the Finance Minister said. “The proceeds will be deployed in public sector projects, which help in reducing the carbon intensity of the economy.”
The government’s plans to issue sovereign green bonds is a welcome move towards carbon neutrality. Prime Minister, Narendra Modi, had vowed to achieve net-zero emissions by 2070 in the recent COP26 climate meeting. The decision to issue sovereign green bonds is a good start and certainly a step forward in the right direction.
An RBI report revealed that while several Indian companies have issued their own green bonds,most of them are listed on India INX. A case in point is the SBI’s $650 million green bonds issued in 2018, which were listed on INX Gujarat. The decision to issue sovereign green bonds will make India a favourite destination for future investments.
India is poised at a critical junction and needs to take up the correct approach if it wants to achieve its COP26 targets. Green bonds are a part of Environmental Social Governance (ESG) and their adoption by the Indian government as a viable tool for raising funds will only increase their widespread acceptance.
This is also in line with the global community recognizing the need to adopt stricter measures to combat climate change. Industry leaders have come out in praise with some taking to Twitter. Prashant Ruia, Essar Group was one of the many who used the social media platform to voice their approval.
“A blue print budget with a nice touch of green! A bold one with a massive hike in public investment will be the booster dose to restart corporate investments. The infrastructure allocation with a focus on technology will generate employment & help transform tomorrow! #Budget2022,” read his tweet.