India Unveils INR 102 Lakh Crore Infrastructure Plan, CII Proposes Investment Boost
The Indian government has outlined a massive INR 102 lakh crore infrastructure spending plan over five years, with the private sector chipping in 22%. To facilitate this, the Confederation of Indian Industry (CII) has proposed several measures, including a credit guarantee scheme and infrastructure bonds. The infrastructure sector is a key driver of the Indian economy.
CII recommends creating a 'India Infrastructure - INR 500 billion Credit Guarantee and Low Interest Long Tenure Government Loan Scheme' to attract investments. Additionally, they propose allowing public and private infrastructure companies to issue tradable zero coupon, long-term tax-free infrastructure bonds based on strict credit rating criteria. To further boost investments, CII suggests increasing mutual fund exposure to these bonds and creating a separate category for infrastructure financing.
The government plans to fund these initiatives through a large Development Finance Institution (DFI). This institution, similar to the National Infrastructure Investment Fund (NIIF) and the National Bank for Financing Infrastructure and Development (NaBFID), will provide long-term funding to industry and infrastructure projects. These projects require specialized expertise and different evaluation methods than traditional banking.
The Indian government's ambitious infrastructure spending plan, backed by CII's proposals, aims to drive economic growth. The establishment of a DFI will play a crucial role in providing long-term financing for infrastructure projects, attracting investments, and boosting the economy.
