Mint Explainer: Why the government is embracing sovereign green bonds

livemint.com:

₹5,000 crore worth of 30-year bonds with another similar tranche likely by the end of the month. That will complete the plan to issue ₹20,000 crore worth of sovereign green bonds for the current fiscal year. The government had issued five-year sovereign green bonds worth ₹5,000 crore in November and 10-year paper worth ₹5,000 crore in December.

India joined the sovereign green bonds club in January of last year with an ₹8,000 crore issuance, followed by a similar tranche in February. Plans to raise funds via green bonds were first announced in the Union Budget for 2022-23. After that, the finance ministry published the Sovereign Green Bond Framework.

The Union budget, to be presented on 1 February, may propose issuance of sovereign green bonds worth at least ₹20,000 crore as part of the borrowing programme for fiscal year 2025 (FY25). Sovereign green bonds are distinct, as they fund public sector green infrastructure projects aimed at reducing carbon emissions and meeting India's Paris Agreement and net-zero commitments. The funds can be allocated in the form of investments, subsidies, grants-in-aid, or select operational expenses, even covering expenditures from the previous 12 months.

The goal is to allocate proceeds to projects within 24 months, with unutilized funds rolling over to the next year for green initiatives. In line with standard government accounting practices, the proceeds are deposited into the Consolidated Fund of India, with subsequent transfers to eligible green projects. The finance ministry maintains a separate account to ensure transparent tracking of the funds.