The Finance Ministry has indicated that it will take a call on the continuation of sovereign green bonds (SGrBs) after three years. These bonds were launched in fiscal year 2022-23 to mobilise resources for green infrastructure.
“Should we stop the green bonds? Our sense is, let us try for another two to three years. Then, we will have to take a call whether it is an effective means of raising money, and we have to take that aspect,” Economic Affairs Secretary Ajay Seth said in his submission before the Standing Committee. This submission is part of the report tabled in the Parliament on Wednesday.
Citing reasons behind the limited success of green bonds, the secretary admitted that performance has been much below expectations. “The expectation was that there is a class of investors who will be ready to settle for a lower yield if they are assured that money will go for a green project, for example, the less carbon-emitting projects etc. Globally, the experience of a green premium is about eight to nine basis points, but our experience has been that the green premium is not even two to three basis points,” he said.
“Globally, it has not happened. India has had the same experience,” he said.
On Tuesday, in a written reply to Rajya Sabha, Minister of State in the Finance Ministry, Pankaj Chaudhary, said that the government raised sovereign green bonds of over ₹57000 crore between FY 2022-23 and FY 2024-25. As per the Sovereign Green Bonds Allocation Report of FY 2022-23, about 78 per cent of the proceeds were allocated to clean transportation, about 21 per cent to renewable energy and about 1 per cent to sustainable management of living natural resources and land use.
