Infra sector has suffered in India due to under-investment: Amitabh Kant

The Dollar Business Bureau

NITI Aayog CEO Amitabh Kant said on Thursday that the infrastructure sector in India has suffered on account of under-investment for a long time.

Kant pitched for channelling pension and insurance funds to finance infrastructure projects and also to completely re-examine the scheme of Viability Gap Funding (VGF).

“We need to build up environment to tap pension and insurance funds for investments in infrastructure projects. VGF scheme needs a complete re-examination,” he said at CRISIL India Infrastructure Conclave in New Delhi.

Launched in 2004, VGF scheme meant to support infrastructure projects that come under the public-private-partnerships (PPPs). VGF means a one-time or deferred grant to support the projects that are economically viable but are not financially viable.

The NITI Aayog CEO said that in past three years, the Government has allocated lots of resources for the development of infrastructure in the country such as airports and roads, almost making up for investment from private sector in those projects.

“You can do it for short run but not for long run. The challenge is to bring private sector investments back in the infrastructure sector,” he stated.

Kant also emphasised that the country needs strong mechanism for bids and concession evaluation of infrastructure projects under the PPP.

He further said that if India wants to maintain a growth of 9-10% then it must build its infrastructure as countries such as Japan, Singapore, South Korea and Taiwan grew on the account of good infrastructure.

Speaking at the Conclave, Ashu Suyash, MD and CEO, CRISIL Ltd said that India would require around Rs.50 lakh crore during 2018-2022 to develop its infrastructure in a sustainable manner.

“India will see close to Rs.3,000 crore investment per day in infrastructure sector, and 56% more than the Rs.37 lakh crore projected spend between fiscals 2013 and 2017,” she said while unveiling the CRISIL’s Infrastructure Yearbook 2017.

She further said that the expenditure of such magnitude needs expeditious resolution of the issue of NPAs in banking, comprehensive re-tooling of PPP frameworks, front-ending of bankable projects and deepening of financing ecosystem in infrastructure, which is of immense importance.