NEW DELHI: India, Asia’s third-largest economy on Thursday approved the sovereign green bonds. The green bonds as said by the FDA will fund renewable projects like wind and small hydro besides major contributions to solar projects. The move by the Indian Finance Ministry aims to tap the domestic debt market to finance clean projects.
In a statement, Nirmala Sitharaman approving the framework for the bonds said it would further buttress India’s commitment towards NDC targets adopted under the Paris Agreement. The bonds in general would be used for project development in the public sector that would succor in cutting down carbon emissions. A sum of Rs 160 billion of such bonds would be issued between October 2022-March2023. Projects across nine categories will be funded through a 16,000 crores green bond offering this year.
Projects exempted from enjoying proceeds from the green funds include hydro projects larger than 245MW, nuclear projects, and any biomass-based power generation with biomass originating from protected areas. A green finance committee headed by Chief Economic adviser V Anantha Nageshwaran will allocate green bonds worthy public sector projects. The proceed will be handed over a period of 24 months from the date of issuance.
Who can use these bonds?
Investors having an interest in the environment and climate preservation projects can buy sovereign bonds. Funds will be allocated to such projects that would mitigate the climate through green bonds. The proceeds from green bond issuances will be deposited in the Consolidated Fund of India in line with the regular treasury policy.