Sovereign green bonds to make a comeback in budget
₹20,000 crore as part of the borrowing programme for fiscal year 2025 (FY25), two people aware of the matter said. A large chunk of these bonds may be sold in the second half of the next fiscal year, one of the two people said. Green bonds address the funding requirements for projects in solar, wind and hydropower sectors.
With several financially viable projects in the public sector in the pipeline, policymakers feel that funds raised through this route will be easily utilized. The Union budget for FY24 did not mention sovereign green bonds. However, the government later included a phased ₹20,000 crore green bond plan for the second half of the borrowing calendar.
Of this, bonds of ₹ 5,000 crore with a tenure of five years were sold in November 2023, and ₹10,000 crore worth of bonds with a tenure of 30 years in two tranches of ₹5,000 crore each are expected across January and February 2024; bonds worth another ₹5,000 crore are expected by March. A spokesperson for the finance ministry did not respond to emailed queries. Despite global challenges, Indian investors seem to have an appetite for sovereign green bonds.
“Sovereign green bonds (in India) are getting fully subscribed," said Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap Llp, a financial advisory firm. “The challenge is getting greenium over normal corresponding maturity government bonds. To date, greenium has been only of a few basis points," he said.
“However, this is a phenomenon across world markets. All treasury markets are facing the issue of not getting expected greenium," he added. Greenium, or green premium, refers to pricing benefits based on the logic that investors are willing to pay extra or accept lower yields in exchange for
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