The move is expected to bolster the country's standing as a leader in the fight against climate change
In a major development aimed at promoting environmentally sustainable infrastructure projects in India, India recently announced the issuance of Sovereign Green Bonds (SGBs) worth Rs. 16,000 crores in the current financial year (2022-23). This bold move is expected to bolster the country's standing as a leader in the fight against climate change and promote a green economy. According to the World Bank, India is among 19 emerging-market countries funding renewable energy and mass transit from the proceeds of green bonds. WHAT ARE SOVEREIGN GREEN BONDS? Sovereign Green Bonds are instruments issued by the government to tap the requisite finance from potential investors for public sector projects aimed at reducing the carbon intensity of the economy. Responding to a question in the Lok Sabha on February 6, 2023, Union Minister of State for Finance Pankaj Chaudhary said Sovereign Green Bonds (SGBs) amounting Rs.16,000 crore were proposed to be issued in the current financial year (2022-23) for mobilising resources for green infrastructure projects. These SGBs would be issued in accordance with the Framework for Sovereign Green Bonds released by the Government of India on November 9, 2022. “The resources mobilised by issuing Sovereign Green Bonds is part of the Government's overall market borrowings in the year 2022-23. The proceeds will be deployed in public sector projects which help reduce the economy's carbon intensity,” Chaudhary stated in his written reply. According to the Framework for Sovereign Green Bonds, a ‘green project’ classification is based on the following principles: • Encourages energy efficiency in resource utilization • Reduces carbon emissions and greenhouse gases • Promotes climate resilience and/or adaptation • Values and improves natural ecosystems and biodiversity especially in accordance with SDG principles This announcement demonstrates strong investor interest in green infrastructure projects and is a part of the Indian government's larger strategy to promote sustainable development, reduce carbon emissions, and promote a green economy. By investing in green infrastructure projects, the government aims to create jobs, promote economic growth, and reduce the country's dependence on fossil fuels. The issuance of Sovereign Green Bonds is also expected to attract foreign investors looking to invest in green projects in India. This will not only help raise funds for green infrastructure projects, but will also enhance the country's standing as a leader in the fight against climate change. SENDING A STRONG SIGNAL TO THE WORLD The move is in line with the ambitious goals announced by Prime Minister Narendra Modi while delivering the National Statement at the COP26 Summit in Glasgow in 2021. Prime Minister Modi stated: “In the midst of this global brainstorming on climate change, on behalf of India, I would like to present five nectar elements, Panchamrit, to deal with this challenge. First- India will reach its non-fossil energy capacity to 500 GW by 2030. Second- India will meet 50 percent of its energy requirements from renewable energy by 2030. Third- India will reduce the total projected carbon emissions by one billion tonnes from now onwards till 2030. Fourth- By 2030, India will reduce the carbon intensity of its economy by less than 45 percent. And fifth- by the year 2070, India will achieve the target of Net Zero. These panchamrits will be an unprecedented contribution of India to climate action.” Moreover, this decision on SGBs sends a strong signal to the world that India is committed to sustainable development and fighting climate change. The country's ambitious plans to promote green infrastructure projects have already garnered significant attention from international investors, which can contribute to the growth of India's green economy. “Emerging markets are not just trend followers. They are leading innovation,” a recent article on the World Bank’s official website quoted Farah Imrana Hussain, who heads the World Bank Sustainable Finance and ESG (Environmental, Social and Governance) Advisory Services, as saying. “India’s green bond will have a huge impact, not only contributing to its nationally determined contribution (NDC) to the Paris Agreement, but also encouraging other countries to raise private capital for environmental priorities,” Hussain said in the article, ‘From India to Indonesia, Green Bonds Help Countries Move Toward Sustainability’, published on April 10, 2023. The Government's emphasis on green infrastructure projects and sustainable development is in line with its long-term vision of a clean and prosperous India. By investing in renewable energy, energy-efficient buildings, and sustainable transportation, the country can reduce its carbon footprint, improve air quality, and promote a healthier environment. At the same time, by investing in a green economy, India can lead the way in the fight against climate change and inspire other countries to follow suit.