CASE STUDY

India Sovereign Green Bond: Financing Climate
Action and Resilient Growth
The World Bank provided technicalassistance to the Government of India toestablish its sovereign green bond programand mobilize private capital to fund its
ambitious plans for sustainable andresilient growth.

BackgroundAs a large, populous, developing economy, India faces
enormous challenges in dealing with the consequencesof climate change while promoting economic growth ina low-carbon pathway. The country is the seventh mostimpacted by weather-related loss events. 1

Photo credit Adobe Stock, By Ashish_wassup6730

In its updated Nationally Determined Contribution(NDC) under the Paris Agreement, the Government ofIndia stated the intention to reach net-zero emissions in2070, reduce the emission intensity of its economy by 45
percent by 2030 over 2005 levels, achieve 50 percent
cumulative electric power installed capacity, and create
additional carbon sink of 2.5 to 3 billion tons of CO2
equivalent through additional forest and tree cover by
2030, among others.

green bond market and issued the equivalent of $290
billion. 2

Implementing its climate commitments and sustainable
and resilient development will require mobilizing funds
from diverse sources. In 2022, the Government of India
announced plans to issue sovereign green bonds toraise resources for green infrastructure. It was decided
that the proceeds would be deployed in public sector
projects that help in reducing the carbon intensity of theeconomy.

Use of proceeds

Financial Solution
Green bonds are debt instruments that support
expenditures and projects with environmental benefits.
They have been one of the innovative financial tools
used by many agents – from sovereigns to corporates
and multilaterals – to finance climate action. Green bondglobal cumulative issuance reached $4 trillion, as ofFebruary 2023. Twenty-nine sovereigns have tapped theGlobal Climate Risk Index 2021:
https://www.germanwatch.org/en/19777.

1

To attract investors interested in sustainable
investments, green bonds are expected to align with theGreen Bond Principles published by the International
Capital Market Association. India followed the Principles
for its Sovereign Green Bond framework, as outlined
below.

In its Framework for Sovereign Green Bonds, theGovernment of India defined nine eligible categories ofprojects that could be financed using sovereign green
bond proceeds – renewable energy, energy efficiency,clean transportation, climate change adaptation,
sustainable water and waste management, pollution
prevention and control, sustainable management ofliving natural resources and land use, green buildings,and terrestrial and aquatic biodiversity conservation.
Eligible expenditures are limited to government
expenditure and best efforts would be made to allocate
all the proceeds within 24 months following theissuance.
Process for project evaluation and selection
The Government of India established a two-tiergovernance process for the evaluation and selection ofprojects that might use proceeds from green bondWorld Bank calculations with data from Bloomberg terminal
and BloombergNEF as of February 28, 2023.

2CASE STUDY
issuances. The initial selection of projects is theresponsibility of the ministry or department in charge ofimplementing the project or program. A Green FinanceWorking Committee has been established to overseeand validate key decisions regarding green bondissuances and selects, reviews, and approves projects
submitted by the ministries or departments forfinancing with green bond proceeds. This Committee ischaired by the Chief Economic Adviser and includes
members from implementing departments, the Ministryof Environment, Forests and Climate Change, the Niti
Aayog (India’s premier public policy thinktank), and theMinistry of Finance (MoF).
Management of proceeds
Sovereign green bond proceeds will be deposited into
the Consolidated Fund of India 3 and managed by theMoF’s Public Debt Management Cell. The Ministry ofFinance will dedicate an information system to maintain,
track, and disclose details of green bond issuance,
allocation of proceeds and information about theeligible projects.
ReportingThe Government of India has committed to providing
investors with transparent reporting on allocation ofgreen bond proceeds as well as on the environmental
impact of the funded projects. MoF will coordinate thepreparation of the post-allocation reports under thesupervision of the Green Finance Working Committee.

Issue date

Allocation and utilization of Green Bonds will be auditedby the Comptroller and Auditor General (CAG) of India.

Outcomes
Following the announcement of the issuance calendar,on January 25, 2023, the government of India issued thefirst tranche of its first sovereign green bond for a total
amount of INR 80 billion (equivalent to $980 million). The
offering was done in the local market comprising two
maturities, 5-year and 10-year, for INR40 billion each.
The 5-year bond, oversubscribed by 2.4 times with a
total of 96 bids, was allocated amongst 32 bidders witha 7.1% annual coupon/yield. The 10-year bond wasoversubscribed by 3.8 times and was allocated amongst
57 bidders with a 7.29% annual coupon/yield.
On February 9, 2023, the Indian government announced
the issuance of an additional INR 80 billion ($968 million)
in sovereign green bonds, with maturities of 5 and 10years, worth INR 40 billion (equivalent to $ 484 million)
each. In the second tranche of issuance, the 5-year bondwas oversubscribed by 1.7 times comprising 62 bids. The
10-year bond was oversubscribed by 2 times with a totalof 91 bids. Both reopenings were allocated to 24bidders.

World Bank’s Role
The World Bank’s Sustainable Finance and ESG Advisory
Services provided technical assistance to theGovernment of India to facilitate the transaction.

1st issuance

Reopening

January 25, 2023

February 9, 2023

AmountINR 40 billion($490 million)

INR 40 billion($490 million)

INR 40 billion($484 million)

INR 40 billion($484 million)

Tenor

5 years

10 years

5 years

10 years

7.10%/7.10%

7.29%/7.29%

7.10%/7.23%

7.29%/7.30%

2.4x

3.8x

1.7x

2x

Coupon/Yield
Oversubscription 4

Contact: Miguel Navarro-Martin, Manager, Financial Products & Client Solutions, The World Bank Treasury
 mnavarromartin@worldbank.org  +1 (202) 458 4722
1225 Connecticut Avenue NW, Washington, D.C., 20433, U.S.A.

Constituted under Article 266(1) of the Indian Constitution.
Reserve Bank of India Press Releases:
https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR1609D41

34A394A9C7C46088DDCFD284D5A8BE9.PDF andhttps://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55190.