Marketers and environmentalists both thumbs-up to the Budget 2022-2024 proposal to issue Sovereign Green Bonds. So here we discuss: “What are these bonds, and why are they called green?”
Three months ago, from 31 October 2021 to 12 November 2021, Prime Minister Narendra Modi joined in COP26 Meeting Glasgow, Scotland, announcing that India will achieve net-zero carbon emissions by 2070.
After that, GOI took a series of steps in this direction, A glimpse of which we got to see in the budget in the form of Sovereign Gold Bond. A glimpse of which we got to see in the Union Budget in the form of Sovereign Gold Bond.
She said, “to issue Sovereign Green Bonds to mobilize required for greater infrastructure will certainly help boost the financing of clean energy projects.” So the Gov. proceeds from these bonds will be developed in public sector green projects that will help in reducing the carbon emission in the environment.
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Why does the Government use these three words: Sovereign, Green, Bond?
Sovereign
When a bond is neither being issued by any corporate sector, nor bank nor individually, but the Government itself is the issuer of the bond, then such a bond is called Sovereign Bond.
A sovereign bond is the safest bond in the world because it is the responsibility of the Government to pay its money, and if any government is not able to return your money, then it means that the country has failed.
That’s why people all over the world give importance to buying sovereign bonds.
This is a great bet for borrowing money from people, although it assures that you will get the money back with interest whenever you go to ask for your money back.
So it’s called the safest bond in the world.
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Green
Here, first of all, we will know two things that are a green investment and gray investment.
Green investment is that development that should be started from the beginning from the basic level. If a house is built, then it is made of empty land, it is not already building anything there, or if there was an open space, the road was constructed there. I
t was called green infrastructure, where there was nothing; a railway line was built there called green infrastructure.
Whereas in gray investment, the already running process is slightly updated. Like where a house was already built, it was renovated and converted into a hotel, a two-lane road was built to convert it to four-lane, a railway line was built, it was connected to electricity Had to go yes, it’s a gray investment project.
In the definition of the World Bank, the word green is environment friendly. That is, any such investment, due to which there is no increase in pollution on the environment, comes in the category of green infrastructure.
Bond
A bond is a kind of assurance given by a company, government organization, or individual.
Donor issues bonds in exchange for money; this is a kind of promise that whenever you need your money, you show us this bond, we will return your money with interest.
Sovereign Green Bond
Sovereign Green Bond is such a bond issued by the Government that the money they will get in return will be used by the Government to do new and environmentally friendly development works
Published By: Jaspreet Singh
Edited By: Kritika Kashyap
