Infra finance shortfall may touch Rs.12.3 lakh croreAugust 18th, 2010 - 5:54 pm ICT by IANS
New Delhi, Aug 18 (IANS) India’s ambitious target of Rs.41 lakh crore investment in key infrastructure sector in the 12th plan period (2012-17) is likely to face a financing shortfall of upto 30 percent or Rs.12.3 lakh crore, Finance Minister Pranab Mukherjee has said.
“While I am hopeful of meeting the target for 11th plan investment, as per our preliminary estimates, there may be a substantial gap of upto 30 percent in financing the even more ambitious target of Rs.41 lakh crore of investment in infrastructure for the 12th plan period,” Mukherjee said.
The finance minister told the parliamentary consultative committee attached to his ministry that the fundamental constraint in infrastructure financing was linked to asset liability mismatch of the banks and their concentration risk concerns, an official statement said Wednesday.
India is heavily dependent on banks to fund its infrastructure projects. Bonds market is largely untapped as India’s stock of listed non-public sector debt is estimated at a meagre 2 percent of GDP.
A robust corporate bond market can help banks address their asset-liability mismatches and bridge the financing gap.
Mukherjee said regulatory changes were needed to attract more foreign capital, especially debt capital, to fund infrastructure projects in the country.
He also highlighted the need to strengthen the corporate bond market and develop credit enhancement mechanisms to enable infrastructure projects, typically non-recourse special purpose vehicles, to access long-term funds from insurance and pension funds.
On development of infrastructure projects in the current plan period, Finance Minister said during the first three years of the plan period actual investment has exceed the target by 9 percent.
While the plan panel had set a target to invest Rs.9,81,119 crore during the first three years of the eleventh plan period, the actual investment was Rs.10,65,828 crore. This is 7.1 percent of the GDP and 9 percent more from the target.
Tags: ambitious target, asset liability, bonds market, consultative committee, corporate bond market, credit enhancement, debt capital, finance minister, fundamental constraint, infrastructure projects, infrastructure sector, mismatch, pension funds, plan period, pranab mukherjee, purpose vehicles, regulatory changes, shortfall, special purpose, substantial gap