Economic affairs secretary Ajay Seth has stated that the government's overall borrowing program includes the issuing of sovereign green bonds. These rupee-denominated papers will have a long term to meet the needs of green infrastructure projects, he added.
In her budget speech, Finance Minister Nirmala Sitharaman revealed that the government intends to issue sovereign green bonds to raise funds for green projects.
She stated during the presentation of the budget for the years 2022-23, "The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy."
According to Mr. Seth, this is part of the overall borrowing for the coming fiscal year.
He further said, “At this point of time, we are looking at the domestic markets and rupee-denominated...the tenure would be normal like any G-sec tenure. It would be medium to long term but not short term. Fund mobilised will be used in the infrastructure sector, which has a requirement of long term finances."
The RBI will issue a framework, which will include data about projects or sectors that would qualify for funding under the sovereign green bonds, before making a judgment on the amount, according to the economic affairs secretary.
He also stated that the rules will include data on the monitoring of fund utilisation in green or low-carbon areas, as well as investor assurances.
"This is not a general-purpose borrowing. These are going to be purpose-oriented borrowing. We will come out with a framework in the coming months. It's not a one-year instrument but there will be more need for such an investment, and more eagerness of the investors in the area in the coming years," he said.
The government wants to borrow a record $11.6 lakh crore from the market in 2022-23 to satisfy its spending needs in the aftermath of the Covid-19 outbreak.
Seth, on the other hand, pledged that the government will implement the market borrowing program in a non-disruptive manner in the coming fiscal year, without squeezing out the private sector.
This is roughly Rs 2 lakh crore more than the Budget forecast for the current fiscal year, which is Rs 9.7 lakh crore.
Even the gross borrowing for the following financial year will be the largest in history, at Rs 14,95,000 crore, compared to the Budget Estimate (BE) of Rs 12,05,500 crore for 2021-22.
However, thanks to an increase in receipts, the gross borrowing has been reduced by roughly Rs 2 lakh crore to Rs 10,46,500 crore for the current fiscal year.
Repayment of previous loans is included in gross borrowing. To fund its fiscal deficit, the government uses dated securities and treasury bills to raise money from the market.
Copyright © © 2022 Copyright. All Rights Reserved with Arth Parkash