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Source: The post is based on the article “FinMin clears framework for sovereign green bonds” published in Indian Express on 10th November 2022.
What is the News?
The Finance Minister has approved the final sovereign green bonds framework to fund environmentally sustainable projects.
What are Green Bonds?
About Sovereign Green Bonds Framework
Aim: To mobilize Rs 16,000 crore through the issuance of green bonds in the current fiscal ending March 2023.
Under the framework, the Finance Ministry will, every year, inform the RBI about spending on green projects for which the funds raised through these bonds will be used.
Eligible Sectors: The proceeds from the green bonds would be used to fund renewable energy, energy efficiency, clean transportation, water and waste management, pollution prevention and control and green buildings among others.
Excluded sectors: Nuclear power generation, landfill projects, alcohol/weapons/tobacco/gaming/palm oil industries and hydropower plants larger than 25 MW have been excluded from the framework.
Where will the proceeds go? The proceeds from the issuance of the green bond will be deposited in the Consolidated Fund of India (CFI) in line with the regular treasury policy, and then funds from the CFI will be made available for the eligible green projects.
What constitutes green expenditure?
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 a combination of all or some of these) or select operational expenditures and R&D expenditures in public sector projects.
– The eligible expenditures will be limited to government expenditures that occurred a maximum of 12 months prior to issuance of the green bonds.
Who will implement the Sovereign Green Bonds Framework?
The Ministry of Finance has constituted a Green Finance Working Committee (GFWC) including members from relevant line ministries and chaired by the Chief Economic Advisor.
– The GFWC will meet at least twice a year to support the Ministry of Finance with selection and evaluation of projects and other work related to the Framework.
– Initial evaluation of the project will be the responsibility of the concerned Ministry/Department in consultation with experts.
– 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.