Budget 2025-26 Expectations: CII Bats For More Financial Support For These Sectors - List

CII has called for an integrated overhaul of India's Priority Sector Lending framework so that it is adjusted with the changing economic priorities. It stated that PSL norms be more aligned with sectoral contribution to GDP and emerge with priority sectors that can serve for long-term growth.

“It’s time to realign allocations with GDP contributions and emerging sectoral growth. For instance, sectors like digital infrastructure, green initiatives, healthcare, and innovative manufacturing must gain focus under Priority Sector Lending,” said CII Director General Chandrajit Banerjee.
 

PSL Framework and Its Problems

Priority Sector Lending, as mandated by the Reserve Bank of India, ensures that credit access is available for agriculture, education, housing, and small industries. This system has been essential for equitable credit distribution, but CII emphasized that it needs to be periodically updated to reflect the changing economic landscape of India.
Agriculture's share in GDP has declined from 30 per cent in the 1990s to 14 per cent today, while PSL allocation remains stagnant at 18 per cent. This makes it imperative to re-base with current contributions and growth potential.

Focus Areas Proposed

CII suggested enhancing PSL to cover the next emerging sectors for India:

• Green: Renewable energy, electric vehicles, climate resilient agriculture.
• Digital Infrastructure: Artificial intelligence, broadband network, advanced technologies.
• Health: Innovation and accessibility of medical services.

In this regard, the industry body emphasized greater support to infrastructure and advanced manufacturing for growth in India.

Key Recommendations

• Periodic Revision: Revise PSL norms every 3-4 years in keeping with economic priorities.
• High-Level Oversight: Set up a committee to review PSL norms and determine whether additional Development Finance Institutions are required over and above SIDBI and NABFID.
• Outcome-Based Metrics: Shift from lending targets to measurable developmental outcomes such that loans lead to socio-economic impact.

Proposals by CII should help make PSL more dynamic and responsive to India's growth trajectory, inducing innovation and sustainability while crediting high-impact sectors.

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