Govt raises ₹8,000 cr via maiden green bond auction

The government has sold securities worth ₹8,000 crore, including ₹4,000 crore worth of 10-year and 5-year notes each, in its first-ever sovereign green bond issuance (SGrBs). The 10-year bond was priced at a coupon of 7.29%, while the five-year bond was priced at a coupon of 7.10%. The auction was conducted using a uniform price method for two securities -- NEW GOI SGrB 2028 and NEW GOI SGrB 2033.

As announced in the Union Budget 2022-23, the government of India, as part of its overall market borrowings, has decided to issue SGrBs to mobilise resources for green infrastructure in the country.

The proceeds will be deployed in public sector projects, which will help in reducing the carbon intensity of the economy. It was notified in the half-yearly issuance calendar for marketable dated securities for the second half of the fiscal year 2022-23 on September 29, 2022, that SGrBs for an aggregate amount of ₹16,000 crore would be issued. The government later issued the Sovereign Green Bond Framework on November 09, 2022.

The next auction of green bonds worth ₹8,000 crore, meanwhile, is slated to be held on February 9, 2023.

As per the Framework for Sovereign Green Bonds Government of India, the government will use the proceeds raised from Sovereign Green Bonds (SGrB) to finance and refinance expenditures for eligible green projects. The green bond framework will facilitate attracting global and domestic investments in green projects in the country.

All eligible green expenditures will include public expenditure undertaken by the government in the form of investment, subsidies, grants-in-aid, or tax foregone or select operational expenditures, R&D expenditures in public sector projects that help in reducing the carbon intensity of the economy and enable the country to meet its Sustainable Development Goals (SDGs).

Notably, with ESG being one of the core agendas of the government in the upcoming Budget 2023, finance minister Nirmala Sitharaman is likely to announce some of the key environmentally sustainable and climate-suitable projects for which funds will be raised through green bonds.

A source close to the development told Fortune India the government kickstarted the process of identifying the projects for which funds will be garnered through green bonds ever since the approval of the green bond framework. “A detailed list of projects and the amount to be raised through green bonds may be announced in the budget,” the official said.

The areas could be renewable energy, energy efficiency, clean transportation, climate change adaptation, sustainable water and waste management, pollution prevention and control, green buildings, sustainable management of living natural resources and land use and terrestrial and aquatic biodiversity conservation.