Industry has to find new ways to fund infrastructure projects as banks struggling with bad loans would not be able to fund them, RBI Governor Shaktikanta Das told an industry gathering organised by CII on Monday. According to estimates of NITI Aayog, the country would need around US $4.5 trillion for investment in infrastructure by 2030.
“On financing options for infrastructure, we are just recovering from the consequences of excessive exposure of banks to infrastructure projects,” Das said. “Non-performing assets relating to infrastructure lending by banks has remained at elevated levels. There is clearly a need for diversifying financing options.”
Das hailed the setting up of the National Investment and Infrastructure Fund and said that it was a major strategic policy response in finding new ways to finance infrastructure projects.
Das also suggested a new North-South, East-West expressways and rail lines alongside, he said the state governments must stop cross subsiding electricity and instead should move to direct benefit transfer schemes.
“As in the case of the golden quadrilateral, a big push to certain targeted mega infrastructure projects can reignite the economy,” the governor said. “This could begin in the form of a north-south and east-west expressway together with high speed rail corridors, both of which would generate large forward and backward linkages for several other sectors of the economy and regions around the rail/road networks.”
Both public and private investment would be key to financing our infrastructure investments, Das added.
Das argued that India has progressed significantly in creation of physical infrastructure in the last few years, which he supported by several statistics. Road construction has increased from 17 kms per day in 2015-16 to close to about 29 kms per day in the last two years.
India is the third largest domestic market for civil aviation in the world with 142 airports. On airport connectivity, India ranked 4th among 141 countries in the Global Competitiveness Report, 2019 of the World Economic Forum. In telecommunication, the overall tele-density at end of February 2020 was 87.7% while the growth of internet and broadband penetration in India increased at a rapid pace.
