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Source: The post is based on the article “Will India’s sovereign green bonds bet work?” published in Livemint on 3rd November 2022.
What is the News?
The Indian government is all set to debut in the green bonds market soon as laid out in the Union Budget 2022.
What are Green Bonds?
Green bonds are an instrument to raise money, at a lower cost than regular bonds, for environment-friendly projects.
The concept goes back only 15 years when a group of Swedish pension funds wanted to invest in green projects as climate worries grew.
About the Green Bonds in India
Yes Bank was the first Indian Bank to issue Green Infrastructure Bonds (GIBs) in India in 2015.
Corporates have been issuing green bonds in India for a few years in a growing market, but the country’s global share stood at just 1% in the first half of 2022.
The Government of India is now planning to issue sovereign Green Bonds to finance a string of clean energy schemes. This includes viability gap funding for battery storage, energy efficiency schemes for small and medium businesses and equity support for hydropower projects in the Northeast.
However, India’s low credit rating becomes a setback in raising money through global markets. Further, the lack of awareness among companies and investors is also a tough hurdle.
Hence, tax benefits, transparent rules and regulations, standardization of the issuance process and clear criteria for green projects are the need of the hour.
