India's Climate Finance Taxonomy: A Path to a Green Future

Economic Affairs Secretary Ajay Seth announced ongoing efforts to develop a taxonomy for climate finance, expected to be ready in six months. This initiative aims to enhance capital for climate adaptation and mitigation. The government's fiscal management is anticipated to aid corporate investments by softening government securities yields.

The Indian government is making strides toward creating a taxonomy for climate finance, a significant move expected within the next six months. Economic Affairs Secretary Ajay Seth, in an interview, unveiled the progress of this crucial initiative aimed at bolstering investments for climate adaptation and mitigation.

Seth highlighted that sector-specific taxonomies, like the one completed by the steel ministry, are significant steps forward. However, a broader approach encompassing all economic sectors is underway. Stakeholder feedback has been gathered through a concept paper, and various committees are working toward finalizing the framework.

The Finance Ministry's plan, as announced in the Budget 2024-25, aims to refine fiscal management, reducing government securities yields and creating more room for corporate investment. The government's borrowing strategy reflects this, with a reduced net borrowing estimate of Rs 11.54 lakh crore due to anticipated tax collection improvements.

(With inputs from agencies.)