Green Bonds Will Be Rupee-Denominated Papers With Long Tenure
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The Economic Affairs Secretary, Ajay Seth, assured that the issuance of the sovereign green bonds is part of the government’s overall borrowing programme. He said that these rupee-denominated papers would have a long tenure to fulfil the requirement of the green infrastructure projects.

In her Budget 2022-23 speech, the Finance Minister, Nirmala Sitharaman, announced that the government proposes to issue sovereign green bonds for mobilising resources to green infrastructure. She stated that the government would deploy the proceeds in public sector projects that help reduce the economy’s carbon intensity.

In a post-Budget interview with the PTI, Ajay Seth stated that the government is looking at the domestic markets, and the tenure of the sovereign green bonds would be normal like any G-sec tenure. It would not be short term but would be medium to long term. The government will use the mobilised funds in the infrastructure sector, which requires long-term finances.

Ajay Seth stated that the Reserve Bank of India (RBI) would develop a framework that will have details about the sectors or projects that qualify for funding under the sovereign green bonds. The guidelines will also have details about monitoring funds in green or less carbon-emitting areas and assurances for investors.

The government plans to borrow Rs.11.6 lakh crore during 2022-23 from the market to meet its expenditure required to support the economy hit by the COVID-19 pandemic. The government would execute the market borrowing programme in a non-disruptive manner in the next financial year without crowding out the private sector. It is about Rs.2 lakh crore higher than the current year’s Budget estimate of Rs.9.7 lakh crore.

For the next financial year, the gross borrowing would be the highest-ever at Rs.14,95,000 crore compared to Rs.12,05,500 crore Budget estimate for 2021-22. However, the government has revised the gross borrowing downwards by about Rs.2 lakh crore to Rs.10,46,500 crore for the current financial year.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in

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