Infrastructure Financing in India

Abstract

Abstract India has announced its first-ever National Infrastructure Pipeline (NIP), the implementation of which would be crucial for maintaining her position as the fastest growing large economy in the world. This book looks at both the traditional and innovative ways in which the NIP can be financed. Traditionally, there are four major sources of infrastructure finance—gross budgetary support, internal and extra budgetary resources of the public sector, multilateral and bilateral loans, and private investment. However, because of the Covid-19 pandemic, most of these sources of finance are quite stretched. The book captures this story in a number of chapters, including a chapter on the impact of Covid-19 on infrastructure and its financing. In this environment of fiscal stress and elevated risk, the book emphasizes a number of non-traditional financing sources like reasonable user charges, which would not only ensure adequate operation and maintenance (and therefore, sustainability), but also improve governance of infrastructure assets. In addition, the book lays major emphasis on making infrastructure more compliant with environmental, social and governance (ESG) norms, with the objectives of providing more sustainable infrastructure services, opening up the vast pool of institutional resources (from pension, insurance, and sovereign wealth funds) for infrastructure investment, and overcoming the traditional trade-off between growth and environment. The book discusses asset recycling and value capture finance as additional avenues for sustainable infrastructure financing. For improving the enabling environment for infrastructure investment, the book also dwells on upholding the sanctity of contracts and addressing concerns about regulatory risk.