Give an account of the hurdles faced in financing of infrastructure in India. Also mention the steps taken by the government to resolve them.
Indian needs about $1.5 trillion investment in infrastructure to become a $5 trillion economy by 2025.
Issues faced in infrastructure financing:
- Fiscal constraints (FRBM).
- Unavailability of funds.
- Huge debt.
- Banks can’t invest in long term projects.
- Policy reforms still stagnant.
- Corporate bond market is underdeveloped.
- Limited scope of investment from mutual funds and debt funds.
Steps taken by government in this regard:
- National infrastructure pipeline of Rs. 102 lakh crore launched.
- Indian infrastructure Finance Company Limited formed.
- PPP models explode in various highways, airports, ports, etc.
- Infrastructure debt funds promoted.
- 5/25 scheme launched to facilitate bank’s investment in infrastructure by enabling the banks to provide for longer repayment period for infrastructure projects.
- Foreign investors allowed to invest in various sectors (liberalisation of FDI).
- Investment and infrastructure fund operationalised as fund of funds.
Infrastructure in social and economic spheres is critical to India’s sustainable growth. Hence, there is a need for more push to private sector and retail investors to tap the unused funds for infrastructure development.
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