| Syllabus: GS-III, Subject: Environment, Ecology and Disaster Management, Topic: Global Agreements and Efforts, Issue: Green finance |
Context: RBI has allowed Foreign Institutional Investor (FII) to invest in Sovereign Green Bonds (SGrBs)
Sovereign Green Bonds (SGrBs):
- Government debt aimed at funding India’s transition to a low-carbon economy.
- Offer lower interest rates compared to conventional G-Secs, known as a greenium.
- Adoption of greenium is encouraged by financial institutions to accelerate the transition to a greener future.
Measures to facilitate SGrBs
- The 2022-23 Union Budget introduced SGrBs to finance projects such as offshore wind, solar power, and EV transition.
- Concerns about greenwashing led to the release of India’s first SGrB Framework by the Finance Ministry in November 2022.
- The framework lists eligible projects like renewable energy investments, energy-efficient buildings, public transport, and EV subsidies.
Benefits
- Supports funding for ambitious net-zero goals pledged by Prime Minister.
- Diversify green investments and gain green credentials.
- Addresses greenwashing concerns, makes green investments in India attractive.
