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Infra Insights

Infra Insights

Long-term financing is what the Indian infrastructure sector needs to attain the projected growth. And Infrastructure Debt Funds (IDFs), which the government had in 2011-12 fiscal under Finance Minister P Chidambaram allowed to form to step up investment in the infrastructure sector, which requires $ 1 trillion in the 12th Plan. The ever-widening gap in banks' asset liability profile has also compelled policy-makers to find alternate solutions like IDFs, that are meant to supplement bank finance in the country's infrastructure by taking over a chunk of Rs 15,44,700 crore loans outstanding as on January 2014, says our cover story. It also talks about how the government is focusing on passing supportive legislations and providing the right environment through which long term players such as pension funds and other investors can come into long term investments vehicles like IDF.

Availability of finances for such huge investment would largely depend on the government's ability to successfully increase reliance on the bond market as an alternative source of financing to bank loans and their ability to implement fiscal consolidation as a means of freeing up bank lending and reducing upward pressure on interest rates. Expert analyst from Frost & Sullivan shares on how IDFs are correcting the asset-liability mismatch and also help advance loans for fresh infrastructure projects. Many firms have already entered into the market for providing funds to infrastructure projects, primarily the road projects. Industry estimates indicate that there are nearly 150 national highway projects operational where these funds can be invested and which are long-term in nature.

While the roads sector looks to revive investments, another sentiment riding the industry wave and causing a debate is the need to have a road regulator. With the proposed Regulatory Authority for Highways in India Bill, 2013 generating a lot of interest, opinions seem divided between the road contractors, the ministry and the Planning Commission, a view that is reflected in the Focus section looking at the whole debate. Our expert analysis from PwC India suggests that the proposed regulatory authority should have advisory, regulatory and development oversight. The need for a road regulator also found support at the 6th India Roads Conference organised by ASAPP Media in Delhi recently.

The roads sector does need special focus as investments have been drying up since 201. And this is evident from the fact that only projects worth less than Rs 500 crore could be awarded in 2013; besides, the government was forced to cancel awarding projects under the PPP mode. According to experts, one of the major tasks of the next government will be to revive interests in the PPP model to kick-start investment. A slew of policy measures, including single-window clearance, foreign funding and a flexible model concession agreement, would be needed to revive private-sector interest.

And while the roads sector needs the finances and the regulatory support, safety on the roads is also an integral aspect that we focus upon with an array of industry voices sharing their thoughts on the issue of road safety. The common view that arises is the fact that not enough is being done to address road safety issues that require a holistic approach.


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