Nirmala Sitharaman Approves India's First Sovereign Green Bonds Framework This approval will further strengthen India's commitment towards its nationally determined contribution (NDCs) targets, adopted under the Paris Agreement
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Union finance minister Nirmala Sitharaman approves the final Sovereign Green Bonds framework of India. This approval will further strengthen India's commitment towards its nationally determined contribution (NDCs) targets, adopted under the Paris Agreement, and help in attracting global and domestic investments in eligible green projects. The proceeds generated from issuance of such bonds will be deployed in public sector projects which help in reducing carbon intensity of the economy.
Green bonds are financial instruments that generate funds for investment in environmentally sustainable and climate-suitable projects. Also, as per reports, green bonds command a relatively lower cost of capital compared to regular bonds
As per a statement from the finance ministry, the framework comes close on the footsteps of India's commitments under Panchamrit as elucidated by Prime Minister Narendra Modi, at COP26 at Glasgow in November last year. The Ministry has constituted a green finance working committee (GFWC) with representation from relevant ministries and chaired by chief economic adviser, government of India.
In November last year, according to reports, Narendra Modi, while speaking at the COP26 Summit in Glasgow had mentioned the five elements to deal with climate change. He had said that, "Initially, India will reach its non-fossil energy capacity to 500 GW by 2030. Further, India will meet 50 per cent of its energy requirements from renewable energy by 2030. Then, India will reduce the total projected carbon emissions by one billion tonnes from now on till 2030. Fourthly, India will reduce the carbon intensity of its economy by less than 45 per cent by 2030, and finally, India will achieve the target of net zero."
As per the statement, the GFWC will meet at least twice a year to support the ministry of finance with selection and evaluation of the projects. The allocation of the proceeds will be reviewed in a time-bound manner by the GFWC to ensure that the allocation of proceeds is completed within 24 months from the date of issuance.