Challenges of Green Finance and Sustainable Economic Development in India

Commerce

India’s aspirations to become a US$ 5-trillion 1 economy by 2024 is contingent environmental outcome. It can be in the form of loans, debt mechanisms and investments that are used to encourage the development of green projects or minimize the impact on the climate of more regular projects. or a combination of both. Green finance is a systematic approach which includes various stakeholders such as government, financial institutions, and regulatory agencies. While framing the regulations for green finance, to create an appropriate incentive and restrictive mechanism, green elements will need to be included into laws and regulations of the countries including fiscal, taxation, monetary, credit and industrial policies. Showing growing momentum in its debut year green bond raised Rs.79 billion issuances by public and private banks, three private corporations issued their own green bonds, demonstrating the market’s quick maturation and diversification into the corporate sector. A lack of unawareness about green finance has created a huge hurdle for investors, companies and banks seeking to implement green investing. Without having a foundation for internal budgeting, accounting and performance measurements for financial institutions, allocating financial resources for green projects and assets becomes complicated.In India, major challenges could be high borrowing costs, false claims of environmental compliance, plurality of green loan definitions, maturity mismatches between long-term green investment and relatively short-term interests of investors. on the steady growth of its Gross Domestic Product (GDP). Green finance is a financial activity a product or service that’s been created to ensure a better economic growth.

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