‘India has to spend ₹50 lakh cr on infra’

Such expenditure needs expeditious resolution of stressed loan problem: Crisil

Labourers work at the construction site of a highway bridge on the outskirts of Jammu August 31, 2013. Scrambling for remedies as investors' faith in India sagged, the government said last week it fast-tracked approval for a slew of infrastructure projects worth $28 billion: but the stroke of a pen in New Delhi will not be enough. The government hopes that speeding up the launch of hundreds of new power plants, highways and oil exploration blocks will breathe new life into an economy that has fallen off its perch as an emerging market high-flier. However, there is no evidence to suggest that these projects will somehow sidestep the obstacles that have hobbled construction for years - from red tape and land acquisition battles to banks' unwillingness to lend to a risk-prone sector. Picture taken August 31, 2013. To match story INDIA-INFRASTRUCTURE/ REUTERS/Mukesh Gupta (INDIAN-ADMINISTERED KASHMIR - Tags: BUSINESS EMPLOYMENT POLITICS CONSTRUCTION)

India would need to spend about ₹50 lakh crore between fiscal 2018 and 2022 to build its infrastructure in a sustainable manner, rating agency Crisil said.

“India will see close to ₹3,000 crore investment per day in infrastructure sector, and 56% more than the ₹37 lakh crore projected spend between fiscals 2013 and 2017,” said Ashu Suyash, MD and CEO, Crisil Ltd. while unveiling the agency’s Infrastructure Yearbook 2017.

Stressed assets

“Spending of such magnitude requires expeditious resolution of the problem of stressed assets in banking, front-ending of bankable projects, comprehensive re-tooling of public-private-partnership frameworks, and deepening of the infrastructure financing ecosystem, which is of tremendous importance,” she said.

The report comes two days after the Centre announced it would spend about ₹7 lakh crore to build more than 83,000 kms of highways by 2022.

On Thursday, the agency also unveiled Crisil InfraInvex, an ‘investability’ index that would track, measure and assess the development, maturity and investment attractiveness of infrastructure sectors. “For years now, the government has been doing the heavy lifting in terms of infrastructure investments. However, having only the public investment cylinder firing is not good enough. Accelerating private sector investments is an essential complementarity, and the other cylinder that needs to fire,” Crisil said.

“The Crisil InfraInvex scores for 2017 show power transmission sector the most attractive to invest in currently, followed by roads and highways, and renewable energy,” said Sameer Bhatia, president, Crisil Infrastructure Advisory.

NITI Aayog CEO Amitabh Kant pitched for channelling insurance and pension funds for financing infrastructure projects as also for a complete re-examination of the viability gap funding (VGF) scheme. Infrastructure sector has suffered in India due to under-investment for a long time, he said. “We need to build up environment to tap pension and insurance funds for investments in infrastructure projects... VGF scheme needs a complete re-examination,” Mr. Kant said at the Crisil India Infrastructure Conclave here.

He said that in the last three years, the Centre had put in ‘lots of resources’ in building infrastructure such as roads and airports, almost making up for private sector investment in such projects. “You can do it in the short run but not forthe long run. The challenge is to bring private investments back in the infrastructure sector.”

(With inputs from PTI)