The Union Budget for which of the following years announced the issue of Sovereign Green Bonds to reduce the carbon intensity of the economy?

Correct — A, 2022–23. The announcement is in the Union Budget speech for 2022-23, delivered on 1 February 2022: "As a part of the government's overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy." The stem's closing phrase is that sentence's own wording, which fixes the Budget beyond doubt. The first tranches were actually sold in January and February 2023, inside the same financial year, and that gap between announcement and issue is what makes the following Budget year look plausible to a candidate remembering the sale rather than the promise.

• (b)2021-22 — 2021-22 is a year too early. That Budget's headline measures were the capital expenditure push and the asset monetisation pipeline, with no green bond announcement.
• (c)2023-24 — 2023-24 is the Budget presented after the first sovereign green bonds had already been sold, so it could not have announced them. This is the trap the item is built on, because the sale and this Budget fall close together in the news cycle.
• (d)2019-20 — 2019-20 predates the framework entirely. India's sovereign green bond framework was published only in November 2022.

A sovereign green bond is ordinary government borrowing with a use-of-proceeds condition attached: the money raised must go to projects that reduce the economy's carbon intensity. India published a Sovereign Green Bonds Framework in November 2022 setting out eligible categories — renewable energy, clean transportation, energy efficiency, climate change adaptation, sustainable water management and the like — and excluding fossil fuel and nuclear projects. The Reserve Bank auctions the bonds as part of the government's regular borrowing calendar, and they have generally priced close to conventional bonds of the same tenor.

The distinction to hold is between the Budget that announced an instrument and the year in which the instrument first appeared. They coincide often enough that candidates stop separating them, and this item punishes that. Here the announcement and the first issue fall in the same financial year, 2022-23, but on opposite sides of a Budget presentation — announced in February 2022, sold in January 2023 — so someone anchoring on the sale reaches for 2023-24. The safest anchor is the phrase quoted in the stem, since a question that reproduces a Budget sentence is pointing at the Budget that contains it.

• Sovereign green bonds were announced in the Union Budget 2022-23, presented on 1 February 2022.
• The stated purpose was to mobilise resources for green infrastructure and reduce the carbon intensity of the economy.
• India's Sovereign Green Bonds Framework was published in November 2022.
• The first tranches were issued in January and February 2023, within the same financial year.
• Eligible categories exclude fossil fuel and nuclear energy projects.

• Answering with the Budget after the first issue rather than the Budget that announced the instrument.
• Confusing sovereign green bonds with masala bonds or with corporate green bonds.
• Assuming a green instrument must be announced by the environment ministry rather than in the Budget.

Asked as a which-Budget recall item, with the stem quoting the announcing Budget's own phrasing and the distractors sliding one year on either side.

No directly related past PYQ was found.

• practice — not a real PYQ

  The proceeds of India's sovereign green bonds are to be deployed in projects that

  • (a)reduce the carbon intensity of the economy
  • (b)expand coal-based generation capacity
  • (c)finance the fiscal deficit generally
  • (d)recapitalise public sector banks

  Answer(a) reduce the carbon intensity of the economy — the use-of-proceeds condition stated in the Budget.

• practice — not a real PYQ

  Who auctions India's sovereign green bonds?

  • (a)The Securities and Exchange Board of India
  • (b)The Reserve Bank of India
  • (c)The Ministry of Environment, Forest and Climate Change
  • (d)The National Stock Exchange

  Answer(b) The Reserve Bank of India — as part of the government's regular market borrowing programme.