Given the challenges associated with accessing finance for climate action, India is issuing a new category of financial instruments. This year, the budget has made a proposal for issuing sovereign green bonds as part of the government’s overall market borrowings.
While the sovereign green bond issuance can send a signal on the country’s commitment to low-carbon growth strategies, it can push the financial market towards decarbonisation. Poland and France, for instance, have raised funds through the issuance of sovereign green bonds. India, too, has jumped on the bandwagon to address the finance gap. The announcement has created exuberance among the country’s green evangelists and climate-conscious investors; this celebration warrants a need to exercise caution and have a closer look at some critical components.
Need for caution
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