The government will float a sovereign green bond, the proceeds of which will be deployed in public sector projects that reduce carbon intensity in the economy, mentioned finance minister Nirmala Sitharaman during her Budget speech on Tuesday.

India’s current external debt is $593 billion as of June 2021, while India’s forex reserves is around $634 billion.

India had issued $6.11 billion in green bonds in the 11 months of CY21, according to the UK-based green bond tracking agency Climate Bonds Initiative. It was the strongest year since green bonds from the country were first issued in 2015. Of the bonds, 94% were issued by non-financial corporations.

According to S&P, corporate and bank issuers in India are likely to tap the climate-related debt market more actively as the world's third-largest emitter of carbon dioxide will need as much as $10 trillion to be carbon-neutral by 2070, experts said. More issuers will also turn to the offshore market where there is a deeper and wider pool of climate-conscious investors.

As per the Sovereign GSS Survey report, the number of Sovereign Green, Social and Sustainability (SGSS) issuers have more than doubled during 2020, despite strong headwinds facing all markets. Nearly $41.2 billion had been issued by the end of 2020, marking a rather impressive 65% increase on the previous year. The year-on-year increase was largely due to the emergence of the social and sustainability categories which together accounted for $8 billion, mentioned the report.

Twenty-four national governments, including, Poland, France, Lithuania, Egypt and Thailand, have issued SGSS bonds, totalling a cumulative $111 billion. The first sovereign green bond was issued by Poland in 2017.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.