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Business News/ News / India/  Hike loan limit for renewable energy under priority sector lending: House panel
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Hike loan limit for renewable energy under priority sector lending: House panel

The loan up to a limit of ₹30 crore is not sufficient as it can take care of small sized renewable energy projects only and there is a need to increase this limit

India has a target to install 175 GW of renewable energy by 2022-end and commitment has been made to increase the renewable energy capacity to 500 GW by 2030. Photo: Hemant Mishra/Mint   (Hemant Mishra/Mint )Premium
India has a target to install 175 GW of renewable energy by 2022-end and commitment has been made to increase the renewable energy capacity to 500 GW by 2030. Photo: Hemant Mishra/Mint   (Hemant Mishra/Mint )

New Delhi: A parliamentary standing committee has recommended the government take steps to increase the loan limit for renewable energy sector under priority sector lending.

The Reserve Bank of India (RBI) has categorised renewable energy sector under priority sector lending for loans up to a limit of 30 crore.

In a report on the financial constraints in renewable energy sector tabled in Parliament, the committee has said that the ministry of new and renewable energy informed the panel that the loan up to a limit of 30 crore is not sufficient as it can take care of small sized renewable energy projects only and there is a need to increase this limit.

The ministry also told the panel that many banks which are not conversant with renewable energy projects, may not offer even this small financial assistance and may cover their priority sector lending obligations with projects from other sectors.

"The limit of loans for renewable energy sector under priority sector lending should be increased. The ministry should pursue this matter with the Ministry of Finance and the Reserve Bank of India," the committee said in its report.

It noted that banks should be sensitised about the importance and benefits of renewable energy so that they do not overlook this sector in their priority sector lending.

The committee under the chairmanship of Rajiv Ranjan Singh, a member of the Lok Sabha, in its report said that there is a huge gap between the required and actual investments.

"It will be a gargantuan task to fill this gap which requires an enabling framework to be created by the government," it said.

Observing that India’s power sector has been experiencing transition with increasing penetration of renewable energy in the energy mix it said that according to the ministry for the long term commitments, an additional investment of about 17 lakh crore has been envisaged which would include associated transmission cost and the country would need an annual investment of 1.5-2 lakh crore in renewable energy sector, while the estimated investment for last few years have been in the range of 75,000 crore only.

India has a target to install 175 GW of renewable energy by 2022-end and commitment has been made to increase the renewable energy capacity to 500 GW by 2030.

The ministry should work proactively to make available and explore innovative financing mechanisms and alternative funding avenues like Infrastructure Development Fund (IDF), Infrastructure Investment Trusts (InVITs), Alternate Investment Funds, Green/Masala Bonds, crowd funding among others for renewable energy sector, said the report.

The report comes just days after Finance Minister Nirmala Sitharaman in her budget speech announced major plans of the government in terms of its commitment towards curbing carbon emission and it focus on green energy.

In her budget speech, Sitharaman announced that, in order to facilitate domestic manufacturing for the ambitious goal of 280 GW of installed solar capacity by 2030, an additional allocation of 19,500 crore for Production Linked Incentive for manufacture of high efficiency modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules, will be made.

She was of the view that the risks of climate change are the strongest negative externalities that affect India and other countries.

The minister further said that circular economy transition is expected to help in productivity enhancement as well as creating large opportunities for new businesses and jobs. The action plans for ten sectors such as electronic waste, end-of-life vehicles, used oil waste, and toxic & hazardous industrial waste are ready.

Further, 5-7% biomass pellets will be co-fired in thermal power plants resulting in CO2 savings of 38 MMT annually. Energy efficiency and savings measures will be promoted through the Energy Service Company (ESCO) business model.

The government also announced to promote a shift to use of public transport in urban areas through clean tech and governance solutions, special mobility zones with zero fossil-fuel policy, and EV vehicles.

"Considering the constraint of space in urban areas for setting up charging stations at scale, a battery swapping policy will be brought out and inter-operability standards will be formulated. The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’," Sitharaman had said.

Prime Minister Narendra Modi also noted that the budget will not only ensure green growth but will also generate green jobs. “Cleantech, special mobility zones, and battery swapping policy will provide momentum to green transport," he had said in a post budget speech on February 2.

The standing committee's report said that the installed capacity of renewable power as of 30 November, 2021 stood at 104.03 GW in the country.

It noted that the renewable energy target of 175 GW has ensured considerable growth in the sector and made renewable energy as one of the fastest-growing sectors in the country. "This has created immense opportunities for investment and credit growth," the panel's report said.

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Published: 04 Feb 2022, 02:36 PM IST
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