Govt Poised To Expand Green Bond Issuance In FY25

New Delhi, Jun 24 (KNN) The upcoming Union budget is expected to propose an increase in sovereign green bond issuance for the fiscal year 2025, according to sources familiar with the matter.

The government is likely to target raising between Rs 25,000 crore and Rs 30,000 crore through these instruments, with a significant portion slated for sale in the latter half of the fiscal year, reported Mint.

This potential increase from the previous year's Rs 20,000 crore issuance reflects growing market demand for sustainable bonds and underscores the government's commitment to expanding green finance initiatives.

The proceeds from these bonds are earmarked for financing sustainable infrastructure projects.

An anonymous official close to the planning process stated, "The borrowings made through green bond instruments during the ongoing fiscal (FY25) will be higher than last year, as there is a demand for sustainable bonds in the market."

Green bonds, which are fixed-income investments used to fund environmentally beneficial projects, have gained traction among investors seeking to align their financial goals with environmental values. This trend comes amid growing concerns over climate change and other environmental challenges.

The government's green bond program has seen steady growth since its inception.

In fiscal year 2023, Rs 16,000 crore was raised through sovereign green bonds, increasing to Rs 20,000 crore in FY24. The projected rise to Rs 25,000-30,000 crore for FY25 represents a continued upward trajectory in this financing strategy.

For the first half of FY25, the government has already announced plans to raise Rs 12,000 crore through green bond sales. This suggests that the bulk of the proposed issuance may occur in the second half of the fiscal year, mirroring the approach taken in FY24.

It is worth noting that while the FY24 budget did not explicitly mention green bonds, the government later incorporated a Rs 20,000 crore green bond plan into the second half of its borrowing calendar.

This plan was executed through several tranches, including a Rs 5,000 crore five-year bond sale in November 2023 and two Rs 5,000 crore thirty-year bond sales in January and February 2024, with an additional Rs 5,000 crore sold by March.

As the government prepares to unveil its budget for FY25, the anticipated expansion of the green bond program signals a continued focus on sustainable finance and environmental initiatives.

(KNN Bureau)