Nirmala Sitharaman approves sovereign green bonds to raise money for environmental projects

India Sovereign Green Bonds Framework: The nation's first Sovereign Green Bonds Framework has been authorised by Finance Minister Nirmala Sitharaman. With this endorsement, India's commitment to the objectives of the Paris Agreement will grow, which will encourage domestic and foreign investment in environmentally friendly initiatives. The funds raised by the sale of sovereign green bonds will be used to fund government initiatives that will lower the economy's carbon intensity.

According to estimates, green bonds could help the government raise Rs 16,000 crore. And green bonds can be issued in the second half of this financial year. These bonds will be of long duration keeping in mind the green infrastructure projects.

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The Finance Ministry claims that this framework is in keeping with India's obligations under Prime Minister Narendra Modi's ‘Panchamrut’ vision for the COP26 conference in Glasgow in 2021. Finance Minister Nirmala Sitharaman discussed obtaining money for green projects by issuing sovereign green bonds when presenting the budget for 2022–2023.

November 9, 2022

Sovereign Green Bonds are a type of financial instrument used to raise money for projects that are resilient to climate change and the environment. Compared to traditional bonds, sovereign green bonds have a relatively lower cost of capital.

In light of this, India's first sovereign green bond framework was created, and in accordance with its guidelines, the Green Finance Working Committee (GFWC) was established to approve significant decisions on the issuing of sovereign green bonds. India's green bond structure will be examined by Norway's Cicero. Cicero gave India's Green Bond Framework a favourable rating, classifying it as ‘Medium Green.’