New Delhi [India], May 15 (ANI): Long-term investment in green bonds is expected to give substantial returns, says a report by the State Bank of India (SBI).

The report highlighted the increasing importance of green bonds, especially at a time when India is witnessing rapid urbanisation and growing environmental concerns.

'The launch of green bonds assumes crucial importance and long-term investments in green initiatives yields more substantive results over time' the report said.

According to SBI Research, green finance can play a major role in tackling the negative effects of urbanisation on the environment.

India is urbanising quickly, and as per Census 2011, the urban population was 31.1 per cent of the total. This figure is expected to rise to 35-37 per cent in Census 2024 and may reach 40 per cent by 2030.

The report mentioned that the relationship between urbanisation and forest cover is U-shaped. In the early stages of urbanisation, forest cover usually decreases due to deforestation and construction activities.

However, as urbanisation progresses, efforts to protect and restore forests increase. These include policies like urban greening, sustainable land-use planning, and forest conservation programmes. This eventually leads to a recovery in forest cover.

The report pointed out that green finance, especially green bonds, can help reduce the pressure on forests in the early and middle stages of urban growth. If these bonds are scaled up and aligned with conservation goals, they can support long-term environmental sustainability.

The report also highlighted a key turning point, when urbanisation reaches 40 per cent, the effect on forest cover becomes positive. This means that after reaching this threshold, cities are more likely to invest in green infrastructure and conservation.

The government has already launched programmes like the Smart Cities Mission and AMRUT (Atal Mission for Rejuvenation and Urban Transformation) to build green infrastructure and improve urban ecological resilience.

These initiatives are in line with the U-shaped pattern and aim to balance urban growth with environmental protection.

The report concluded that with proper planning and continued investment in green projects, green bonds can be a powerful tool for both economic growth and environmental conservation. (ANI)