As part of its green-funding initiative, the Indian government has identified projects worth Rs 250 billion that will be funded by proceeds from sovereign green bonds issued in the current and the next financial year. The projects that have already been identified for green financing are primarily in the renewable energy and clean transportation sectors. A working panel on green finance, led by chief economic adviser V Anantha Nageswaran, has been tasked with selecting projects from proposals submitted by various government departments.
Recently, the Indian government concluded the sale of sovereign green bonds worth Rs 160 billion, with the second tranche raising Rs 80 billion. The second tranche included Rs 40 billion in bonds with a five-year tenor and a similar amount of bonds with a ten-year tenor. The five-year bond yielded 7.25 per cent, while the 10-year bond yielded 7.34 per cent. The Reserve Bank of India (RBI) set the cut-off yields for the two bonds at 7.23 per cent and 7.29 per cent, respectively. On January 25, 2023, the first tranche of India’s debut sovereign green bonds worth Rs 80 billion was auctioned. The first instalment paid out slightly more than the second.
The RBI stated in its half-yearly report on government finances that the green bonds will be issued in the final quarter of the financial year of 2022-23. The government has stated that the bond proceeds will be used to fund “green” public-sector projects that will reduce the economy’s carbon intensity. Meanwhile, the Indore Municipal Corporation will sell a green bond on February 10, 2023 to raise Rs 2.45 billion for a 60 MW ground-mounted captive solar photovoltaic project in Madhya Pradesh. The deadline for submissions is February 14, 2023. The green municipal bonds will have maturities of 3, 5, 7, and 9 years, with a coupon rate of 8.25 per cent.