Economic Survey emphasizes on green financing
The recently released Economic Survey emphasizes the framework of green financing.
Green finance refers to the financial arrangements used in environmentally sustainable projects. It also includes projects adapting to the aspects of climate change.
These include clean energy projects, clean transport, energy efficient projects etc. For example green building and waste management projects, sustainable water management projects etc.
New financial instruments are being set up to meet the financial needs of such projects. These include green bonds and carbon market instruments (such as carbon taxes). Simultaneously, new financial instruments such as green banks and green funds are also being set up.
Importance of Green Finance:
It will help address the challenges facing sustainable economic development. Apart from this, it will also help in protecting and substantially improving the environment.
Challenges related to green financing:
High borrowing cost, false claims of environmental compliance, no definite definition of green credit etc.
Initiatives launched in India:
- The Sustainable Finance Group of RBI is tasked with regulatory initiatives on sustainable finance and climate threats.
- The Finance Ministry has constituted a Task Force on Sustainable Finance.
- The Reserve Bank of India has also included the small renewable energy sector under its Priority Sector Lending (PSL) scheme.
Source – The Hindu
