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India needs Rs 1,700 cr a day to build infra facilities

India Coal Market Watch

December 17: India needs to spend a whopping Rs 1,700 crore every day, or Rs 600,000 crore every year over the next five years to provide uninterrupted power supply and improve its roads, telecom, transport and other urban infrastructure, according to a recent report jointly published by ASSOCHAM and CRISIL.

“The funding requirement for building India’s infrastructure is large. We need close to Rs 31 lakh crore over the next five years to provide uninterrupted power supply to our homes and factories and improve roads, telecom, transport and other urban infrastructure. That translates into more than Rs 6 lakh crore of investments every year or around Rs 1,700 crore every day from April 2015 to March 2020,” reveals the report titled “White Paper on Infrastructure Financing”.

Noting that the banks have played a critical role in infrastructure financing, the report says that over the past 10 years, bank lending to the infrastructure sector has grown at a CAGR of 28%, higher than the overall credit growth. Infrastructure’s share of bank credit has doubled from 7.5% in 2005 to 15% in 2015.

“But, they (banks) also need gigantic capital to lend. On the other hand, the new norms for raising external commercial borrowings will make things easier for companies to borrow overseas. But, here the catch is that they come with currency risks, and the tools to counter them need to evolve. That leaves the bond market, whose role in meeting this financing requirement will be crucial,” the report says.