Looking at the increasing pollution and carbon emissions worldwide, the government is also accepting the fact that green energy is the only future, not only in terms of finances but also in terms of making the earth a better place to live. It might be the primary reason why the government has allocated a significant portion of the budget toward making India a green country.
The measure taken by the government in Budget 2023:
The government has allocated ₹35,000 crore or $4 billion for three major purposes:
To reduce the cost of capital for low-carbon investment in the country.
To promote and enhance the demand for LED lighting & electric buses.
To finance the hydrogen electrolyzers and off-shore winds for battery storage.
Promotion of electric vehicles
As you can see, the demand, infrastructure, and production of electric vehicles are increasing over time. Automobile giants such as Tata are entering the market and increasing their investment capacity of installing charging stations, battery swapping infrastructure, and innovative techniques of making EVs affordable for the end users.
How can you take advantage?
There can be two ways you get an advantage by investing in a similar line as the government is suggesting. These two ways are as follows:
Investing in core green technology businesses
When the government is involved in any sector, in the sense of promoting the same by providing incentives and support in building infrastructure, it becomes easy for businesses to establish their full capacity with lower costs. You can invest in companies that are involved in the businesses like EVs, battery swapping, charging stations, electric buses manufacturing, LED businesses, etc.
Investing in ESG
The government’s major focus is not only to produce in a green way but also to reduce existing carbon emissions. Companies are contributing to reducing carbon emissions significantly by taking steps like replacing old machinery with new eco-friendly technologies, using paper bags instead of polythene bags, and recyclable packaging. You can invest in these companies with an ESG scorecard that ranges between 0 and 100.
However, you can also evaluate by keeping yourself updated about the prevailing news in the market about the company and industry in which you are planning to invest along with its past record regarding ESG (environment, social, and governance). Keep a track of the companies on the steps taken by the management towards environmental improvement and contribution to overall climatic upgradation.
Assets to invest in
You can start investing through individual shares of the companies or corporate bonds by creating a portfolio. Also, there are various ESG funds available in which mutual fund companies create a portfolio by scrutinising environment-friendly companies on your behalf and investing accordingly.
When the government promotes some sectors, it becomes much more authentic and profitable for the company and investors as well. Companies become vulnerable to profitability which is eventually beneficial for the investors in terms of capital appreciation and dividends if invested in shares, timely payment of interest, and less risk on principal repayment if invested in debt instruments of the company.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com