Rs 16K-crore green bond framework to cover funding across sectors

Source: The post is based on the article “Rs 16K-crore green bond framework to cover funding across sectors” published in Business Standard on 7th November 2022. 

What is the News?

The Ministry of Finance is expected to soon release a framework for its maiden Rs 16,000-crore Green Bond issuance.

What is Green Bond?

A green bond is essentially a fixed-income instrument, just like the regular corporate or government bond, but it is issued to raise capital specifically for climate-related or environmental projects. 

This specific use of the funds distinguishes green bonds from regular papers (the funds raised via regular bonds have no such strings attached).

About the proposed Green Bond Framework

As part of the Fiscal Year(FY-23) borrowing calendar, the Finance Ministry had announced that it would issue sovereign green bonds worth Rs 16,000 crore.

The framework is expected to cover the funding of green and sustainable infrastructure across the road, railway, urban transportation, agriculture and social sectors apart from renewable energy projects.

Significance: Once issued, India will join the club of 25 nations so far whose governments have issued bonds to exclusively fund climate sustainability and green infrastructure projects and initiatives.