Power sector the most attractive and urban sector the least attractive: Crisil
More private sector investments in infrastructure projects the need of the hour.
The power transmission sector in India is the most attractive to invest in currently, followed by roads and highways, and renewable energy. Thermal generation, power distribution and railways need a lot of facilitation before they can draw big money but it is the urban sector, which is the least attractive right now, that requires a lot of attention, says the Infrastructure Investability Index by rating agency Crisil.
Also, more private sector investments in infrastructure projects are required, said Niti Aayog CEO Amitabh Kant at the Crisil India Infrastructure Conclave and pitched for channelling insurance and pension funds for financing infrastructure projects as also for a complete re-examination of the Viability Gap Funding (VGF) scheme.
Infrastructure sector has suffered in India due to under-investment for a long time, he said. “We need to build up the environment to tap pension and insurance funds for investments in infrastructure projects…VGF scheme needs a complete re-examination,” Kant said.
Kant said that in last three years, the government has put in lots of resources in building infrastructures like roads and airports, almost making up for private sector investment in such 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 noted.
India needs to spend at least Rs 50 lakh crore between fiscals 2018 and 2022 to build out its infrastructure sustainably, as per the CRISIL InfraInvex, India’s first investability index that tracks, measures and assesses the development, maturity and investment attractiveness of infrastructure sectors the
“India will see close to Rs 3,000 crore investment per day in the infrastructure sector, and 56 percent more than the Rs 37 lakh crore projected spend between fiscals 2013 and 2017,” said Ashu Suyash, Managing Director & CEO, CRISIL Ltd.
“Spending of such magnitude requires expeditious resolution of the problem of stressed assets in banking, front-ending of bankable projects, comprehensive re-tooling of public-private partnership frameworks, and deepening of the infrastructure financing ecosystem, which is of tremendous importance.”
For years now, the government has been doing the heavy lifting in terms of infrastructure investments. However, having only the public investment cylinder firing is not good enough. Accelerating private sector investments is an essential complementarity, and the other cylinder that needs to fire, says the CRISIL Infrastructure Yearbook 2017.
The CRISIL InfraInvex is based on four pillars – policy direction, institutional strength and regulatory maturity, financial sustainability, and implementation ease. Being an ascending scale, a score of 1 reflects least investment attractiveness and maturity, and a score of 10 highest investment attractiveness and maturity.
“The CRISIL InfraInvex scores for 2017 show that the power transmission sector in India is the most attractive to invest in currently, followed by roads and highways, and renewable energy,” said Sameer Bhatia, President, CRISIL Infrastructure Advisory.
“Thermal generation, power distribution and railways need a lot of facilitation before they can draw big money. The urban sector, which is the least attractive right now, also needs a lot of attention.”
Source: moneycontrol
