‘Taxonomy for climate finance is India’s global gateway’
“When we talk about standards, disclosures will have to be made. Not only investmentrelated issues but also usagerelated issues have to be addressed, and decisions will have to be provided,” Seth added.
In her budget speech on Tuesday, finance minister Nirmala Sitharaman said India will develop a taxonomy for climate finance to enhance the availability of capital for climate adaptation and mitigation, which will support the achievement of the country’s climate commitments and green transition.
The climate finance taxonomy will identify the assets, activities and projects needed to deliver a low-carbon economy consistent with the goals of the Paris Agreement, which are mitigation, adaptation and finance commitments to reach the climate goals.
On sovereign credit ratings, Seth said the government is in regular conversation with credit rating agencies to convince them for better ratings on the back of the strength of the Indian economy.
India has maintained that its economic health has improved considerably since the pandemic, and finance ministry officials have met rating agency officials to press for an upgrade.
A sovereign credit rating measures a government’s ability to repay its debt. A higher rating indicates greater trust in the ability to repay and, consequently, lower borrowing costs.
While S&P and Fitch rate India at BBB-, Moody’s rates the South Asian country at Baa3, which indicate the lowest possible investment grade.
However, in May, S&P Global sparked hopes for a long-awaited sovereign ratings upgrade for India, raising its country outlook to positive from stable after 14 years.
“The next stage is the ratings upgrade, but coming back to bringing debt to a more sustainable level, we intend to have enough focus, enough space so that if another crisis of the proportion which we saw four years ago (coronavirus pandemic) were to come forward, there should be space available for fiscal policy to respond.
“Overall, the goal is to bring the total debt to a more sustainable level,” Seth said.
“The idea is to let the economy grow at a fast pace and an inclusive manner for a long time. So, the need for investment will be more. We have the potential to sustain high debt for the longer term, but not at the current level of 56%,” he added.
The central government’s debt stood at just over 56% of GDP at the end of FY24, lower than 57.1% at the end of March 2023.
Meanwhile, a committee on infrastructure financing headed by Bibek Debroy, chairman of the PM-EAC (Prime Minister’s economic advisory council), in which Ajay
Seth said the Centre is in talks with credit rating agencies to convince them for better ratings for India
Seth is a member, has undertaken a comprehensive assessment of the characteristics and parameters defining the infrastructure financing framework.
The committee is preparing a framework for infrastructure financing under both public and private financing setups and broad approaches for various sectors, Seth said.
“The committee is looking at financing different sectors like roads, railways and ports. What should be our approach for public versus private financing? How can the private sector be incentivised to invest?” Seth said. rhik.kundu@livemint.com For an extended version of this story, go to livemint.com.