03 OCT,2022 | MEDC
The government is issuing green bonds for the first time ever this year. This should be seen in the global backdrop of setting aside funds, both public and private, for environmentally-sensitive development. But the success of this plan hinges critically on the creation of an investment-friendly ecosystem in India. The innate advantage of issuing green bonds is a lower cost of financing as compared to regular bonds. But the foreign funds that buy such bonds globally are still not adequately represented in India, and domestic investors may be reluctant to accept a lower rate of return due solely to altruistic reasons. The way out could be to give some fiscal incentives and tax breaks to banks and retail investors to purchase such bonds. The idea is noble but it needs astute policy marketing.