Green government bonds get approval from FM Sitharaman

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Framework for green government bonds: Finance Minister Nirmala Sitharaman has approved India’s first government green bond framework. With this endorsement, India’s commitment to the Paris Agreement goals will grow and encourage domestic and foreign investment in green initiatives. Proceeds from the sale of government green bonds are used to fund government initiatives to reduce the carbon intensity of the economy.

Green Bonds

It is estimated that green bonds could help the government raise 16,000 rupees. Green bonds can also be issued in the second half of this financial year. These bonds are issued for a long period of time to fund green infrastructure projects.

According to the Treasury, this framework is in line with India’s commitments under Prime Minister Narendra Modi’s “Panchamrut” vision for the COP26 conference in Glasgow in 2021. Presenting the budget for 2022-2023, Finance Minister Nirmala Sitharaman mentioned the Raising funds for environmental projects through the issuance of green government bonds.

Sovereign Green Bonds vs. Traditional Bonds

Sovereign Green Bonds are a type of financial instrument used to raise funds for climate and environmental projects. Green government bonds have a lower cost of capital compared to traditional bonds.

With this in mind, India’s first government green bond framework was established and the Green Finance Working Committee (GFWC) was formed to approve key decisions on government green bond issuance. Cicero from Norway will examine India’s green bond structure. Cicero rated India’s Green Bond Framework positively and rated it as “Medium Green”.



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