Infrastructure

December 6, 2019 India INC

Infrastructure

Investment opportunities in the lifeline of Indian economy have never been as greener and profitable as it’s now. With 100 per cent FDI allowed in almost all the infrastructure sectors, the massive wheel of growth has already begun spinning. And buttressing its growth has been India’s strong economy, which during the first quarter of the fiscal year 2005-06, touched an impressive growth of 8.1 per cent. With this rate, India is not only one of the fastest growing economies but has also propelled its infrastructure to grow at a rapid rate. Following the Asian route where the bulk of FDI in infrastructure came through green-field route rather than privatisation, India has progressively opened its door to foreign players. In fact, between 1990 and 1998, if infrastructure projects in the developing countries attracted about $ 63 billion, India was not much behind in pulling some of valuable investment to its shores. Moving a step further, India in fact, allowed strategic investment in major airports with a 74 per cent equity ceiling. And it was not too long back when Prime Minister Dr Manmohan Singh while addressing NYSE stressed upon India’s need for $150 billion in the next few years for developing its core sector including power, communication, airports and urban amenities. And to give a shot in the arm, the government is also stepping in to manage and mitigate risk in sectors where there is uncertainty regarding future revenue flows. In roads, for instance, the Government is following an annuity based model to attract BOT projects. Most importantly, the infrastructure policies have a long-term horizon and provide a roadmap that investors can follow in structuring projects and assessing viability. This will go a long way in mitigating the regulatory and political risks that investors typically identify with these projects. Given the various risks associated with infrastructure projects, the role of bilateral and multilateral agencies has become crucial as these agencies are playing a crucial role in funding infrastructure in India. Multilateral agencies such as the World Bank, The Department For International Development (DFID), Japan Bank for International Cooperation (JBIC) and Asian Development Bank (ADB) have been financing projects in India including power, roads and highways, telecom, irrigation and have proved that growth in Indian infrastructure is here to say. In fact, it’s this combination of domestic, private, foreign and multilateral investments, which holds promise to propel India’s infrastructure growth to greater heights. And for a robust economy and robust India, there can’t be a greater attraction than a well laid out road ahead.