Taxonomy for climate finance should be ready in 6 months: DEA secretary

Economic Affairs Secretary Ajay Seth has said work with respect to developing a taxonomy for climate finance is going on and it should be ready in the next six months or so.

"Work is happening, and in fact, the steel ministry has completed their work. They have issued their taxonomy for the steel sector," he told PTI in an interview.

However, he said, a much more comprehensive exercise covering all sectors of the economy is going on and a concept paper has already been shared with stakeholders concerned and their views have been obtained.

"Various committees have been formed, one for each sector, and we expect that over the next six months that exercise can be completed," he added.

Finance Minister Nirmala Sithraman in her Budget 2024-25 had announced a proposal for developing a taxonomy for climate finance.

"We will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation. This will support achievement of the country's climate commitments and green transition," she had said.

Seth further said the government's prudent fiscal management may soften government securities yields and leave more funds for corporates to invest in the economy.

In absolute terms, he said, "We will be borrowing (for FY26) less than what we intend to borrow in the current year. Even the gross borrowings are also marginally more than what it was, signalling that the government will leave enough into the market for the private sector to pick up".

The government has reduced its borrowings estimate for the next financial year to Rs 11.54 trillion on a net basis as it expects an improvement in tax collection. However, gross market borrowings have now been revised upward to Rs 14.82 trillion from Rs 14.01 trillion estimated for the current financial year.

The government has to borrow by issuing dated securities to meet its fiscal deficit target.

"So, I see that the fiscal consolidation this year and fiscal consolidation road map next year should rather soften the yield... there are other factors also in place," he said.

It is to be noted that softening of yield on G-secs would bring the burden of interest payment on the government.

The yield on 10-year government bonds is hovering around 6.7 per cent.

As per the government data, the weighted average yield softened to 6.94 per cent in the second quarter, relative to 7.14 per cent in the first quarter of 2024-25.

The government has lowered its fiscal deficit target to 4.8 per cent of GDP for the current financial year against 4.9 per cent estimated earlier.