Introduction
The Ministry of Finance conducted a webinar post the announcement of the Union Budget 2022-23 to discuss on the topic financing for growth and aspiring economy for a speedy implementation of the announcements in the Union Budget. Top focus of the budget included PM Gati Shakti, inclusive development, productivity enhancement, sunrise opportunities, energy transition, climate action and financing for investments. Discussions were broadly based on these focused areas with major themes being finance, infrastructure, banking digital economy, climate finance and sunrise sectors. The objective of the session was to engage and channelise domestic financing for accelerating economic growth.
Indian banks & their role in lending
Indian financial system and institutions have always encouraged key developmental initiatives in the country. According to RBI data, commercial banks accounts for 94% of the total non-food credit deployed by all scheduled commercial banks. Non-food credit stood at Rs.115.5 lakh crore (US$ 1.5 trillion) and registered a growth of 8% in February 2022 compared to 6.6% a year ago. Priority sector lending stood at Rs. 4,52,000 crore (US$ 58.8 billion) as of February 2022.
Following table highlight the banks non-food credit growth over last 10 years-
India bank credit -Non-food (Last 10 years) |
|||
Financial Year |
Non-Food bank credit |
Non-Food bank credit |
Variation-YoY |
2011-12 |
4,530,548 |
596 |
16.8% |
2012-13 |
5,164,037 |
679 |
14.0% |
2013-14 |
5,895,649 |
775 |
14.2% |
2014-15 |
6,442,002 |
847 |
9.3% |
2015-16 |
7,144,361 |
939 |
10.9% |
2016-17 |
7,787,539 |
1,024 |
9.0% |
2017-18 |
8,583,436 |
1,129 |
10.2% |
2018-19 |
9,730,112 |
1,279 |
13.4% |
2019-20 |
10,319,097 |
1,357 |
6.1% |
2020-21 |
10,888,255 |
1,432 |
5.5% |
2021-22* |
11,558,783 |
1,520 |
8.8% |
# Data as of February 2022; Source: RBI
Projects and programs emphasized for growth
Prime Minister Mr. Narendra Modi highlighted on giving importance to financially viable models on all priority sectors in India. He also emphasised on importance of financial institutions participation for the aspirational growth of the country. Furthermore, he also indicated that centre has tried to accelerate economic growth by way of encouraging capital flows, reducing tax on infrastructure investments and creating institutions like National Investment and Infrastructure Fund (NIIF).
Mr. Modi mentioned following key points in which financial institutions can play a major part for accelerating economic growth:
Recent announcements/developments
Conclusion
Union Budget 2022-23 has included several steps that will be helpful in maintaining a strong momentum of growth in the future. The budget has programs that will be helpful in building modern infrastructure, encourage private investments, increase digital banking presence and use of green financing. The government has highlighted the role of financing institutions in the country to help them achieve the budget announcements. With financial institutions focused on increasing credit growth, there is ample room to support key projects to further economic growth and development of the country.