Introduction
India is witnessing a surge in annual loan sanctions to various sectors, especially renewable energy, roads and highways, and logistics. The government has been promoting entrepreneurship among women, Scheduled Castes (SCs) and Scheduled Tribes (STs) through the Stand-Up India Scheme, which has facilitated more than 1.33 lakh new job-creators and entrepreneurs in six years. Public sector lenders such as REC and IREDA have also been expanding their portfolio and footprint in the renewable energy and logistics sectors, aiming to sanction loans up to Rs 2.5 trillion annually by 2030 .
Renewable Energy Sector
The renewable energy sector has been one of the key drivers of loan sanctions in India, as the country strives to achieve its target of 450 GW of installed renewable energy capacity by 2030. According to the Ministry of New and Renewable Energy (MNRE), India’s renewable energy capacity stood at 100 GW as of November 2023, with another 50 GW under installation and 27 GW under tendering. To support this growth, public sector lenders such as REC and IREDA have been increasing their loan sanctions to the sector.
REC, formerly known as Rural Electrification Corporation, aims to tenfold its portfolio in the renewable energy sector to Rs 3 trillion by 2030 from the current Rs 30,000 crore. The company targets for 30% of its Asset Under Management to come from renewable energy sector. In the financial year 2022-23, REC had sanctioned more than Rs 85,000 crore to the renewable energy sector of the total sanction of Rs 2.68 trillion.
IREDA, or Indian Renewable Energy Development Agency, also achieved a historic annual performance in FY 2021-22, with the highest ever loan sanctions of Rs 23,921 crore, up by 117% from Rs 11,001 crore in FY 2020-21. The company also disbursed Rs 8,827 crore in FY 2021-22, up by 37% from Rs 6,445 crore in FY 2020-21. In FY 2022-23, IREDA’s loan sanctions grew by another 36% to Rs 32,586 crore.
Roads and Highways Sector
The roads and highways sector is another major beneficiary of loan sanctions in India, as the government has been investing heavily in infrastructure development and connectivity. According to the Ministry of Road Transport and Highways (MoRTH), India has constructed a record 13,394 km of national highways in FY 2020-21, at an average of 37 km per day. The ministry also awarded projects for building 14,788 km of national highways in FY 2020-21.
To finance these projects, public sector lenders such as REC have been sanctioning loans to the roads and highways sector. REC plans to sanction loans of Rs 1 trillion to the roads and highways sector in the current financial year (FY 2023-24), up from Rs 85,000 crore in FY 2022-23. The company aims to increase its footprint in the logistics sector by sanctioning loans up to Rs 2.5 trillion annually by 2030. The chairman of REC said that the development of the road and highway sector in PPP mode requires funding from the private sector.
Stand-Up India Scheme
The Stand-Up India Scheme is a flagship initiative of the government to promote entrepreneurship among women, SCs and STs. The scheme was launched on April 5, 2016 and was extended for the entire period coinciding with the 15th Finance Commission period of 2020-25. The scheme provides loans for greenfield enterprises in manufacturing, services or the trading sector and activities allied to agriculture.
As per the latest data available on Stand-Up India portal (as on January 10, 2024), more than Rs 30,160 crore loans have been sanctioned to over 1,33,995 accounts under Stand-Up India Scheme since its inception. Out of these accounts, more than one lakh accounts belong to women entrepreneurs (75%), followed by SC entrepreneurs (16%) and ST entrepreneurs (9%). The scheme has also covered all states and union territories of India.
The finance minister said that as more and more beneficiaries from underserved segments of entrepreneurs are targeted for coverage, the scheme would make significant strides towards building an Atmanirbhar Bharat.
Conclusion
India is on a growth trajectory of annual loan sanctions to various sectors, especially renewable energy, roads and highways, and logistics. The government has been supporting entrepreneurship among women, SCs and STs through the Stand-Up India Scheme, which has created more than 1.33 lakh new job-creators and entrepreneurs in six years. Public sector lenders such as REC and IREDA have also been increasing their loan sanctions to the renewable energy and logistics sectors, aiming to sanction loans up to Rs 2.5 trillion annually by 2030. These initiatives reflect the government’s commitment to boost economic growth, create employment opportunities, and achieve sustainable development goals.