SGBs set to power agri-solar, green H2, and metro rail projects

The largest share has been submitted by the ministry of new and renewable energy which would finance the PM Kusum scheme

Energy infra ministries have sought Rs 32,000 crore for funding green energy, energy transition and transit-development projects through sovereign green bonds (SGBs).

“In the Budget estimates for 2024-25, ministries have proposed fund requirements of Rs 32,061 crore under schemes eligible for funding through SGBs. However, the actual amount to be raised through issuance of SGBs in FY25 will be decided / notified separately,” stated the Union Budget’s expenditure profile documents.

 The largest share has been submitted by the ministry of new and renewable energy (MNRE), which would finance the PM Kusum scheme, National Green Hydrogen Mission (NGHM) and several solar and wind energy schemes through the proceeds of green bonds.

The MNRE has sought Rs 10,000 crore for solar projects, which is one of the core focus areas of the Centre in its energy transition drive. Officials said this would include a variety of projects and new schemes across the solar supply chain.

Speaking on Tuesday after the Budget presentation, Pralhad Joshi, Union Minister for MNRE, said the requirement could be much more and that discussions will follow.

“This is the requirement that the finance ministry has drafted. We will have a series of discussions and the allocation will be decided. Sovereign bonds have backed several flagship green schemes and the Centre is committed to offer more support,” he said.

Apart from green energy, projects in other segments such as public transport would also benefit from green bond funds.

The National Mission for Green India aims to protect and restore the plant cover. There are three green railway projects — production of energy efficient three-phase electric loops, construction of metro rail near Kolkata airport, and another metro station in the city — Majerhat.

Additionally, the ministry of housing and urban affairs (MoHUA) will be given close to Rs 3,364 crore for its equity investment in several metro projects.

These same projects received funding from the green bond issuance over the last two years as well. However, the quantum given to each has increased more than double in a few cases.

India launched its maiden sovereign green bond in 2023 to tap the growing global climate finance market.

In 2022-23, the Centre raised Rs 16,000 crore and in 2023-24, it had planned to mop up Rs 20,000 crore.

According to the Union Budget documents, in FY23, the government raised Rs 16,000 crore through SGBs and the actual amount spent under the schemes eligible for financing stood at Rs 16,923 crore.

In FY24, the government has notified to raise Rs 20,000 crore through SGBs.

Additional expenditure under eligible schemes, if any, over Rs 20,000 crore will be financed through general revenues of the government, the Budget documents stated.