Need To Make Development Financing Institutions for Infrastructure Development

The government and regulators have taken effective steps at appropriate times to save the liquidity for the infrastructure projects and create effective demand in the market for continuity of businesses, deliberated Padmanabhan Raja Jaishankar, Managing Director, IIFCL, Government of India, in a session organised by PHD Chamber of Commerce and Industry on ‘Infrastructure Investment During COVID Times’.

He further mentioned that long term infrastructure projects with economic prospects appear to be severely impacted by the lockdown induced disruptions. “We have to understand that all this has diminished consumer confidence and at the same time induced more risk. In today’s times, there is a need to have relay financing for uplifting and giving stability to the infrastructure industry.”

He deliberated that there is a need for a significant push in the restoration of infrastructure financing of mega-infrastructure projects.

Public and private sectors need to play their respective roles in reviving infrastructure projects. National Infrastructure Pipeline has got investment from big companies and, banks with almost 40 percent of its projects already in the implementation stage and rest under development.

Talking about the challenges faced during the pandemic, he said that this is the time we need to look towards infrastructure projects and investments with a fresh perspective, and how we can define long term infrastructure financing as infrastructure projects have a long term timeline. He also highlighted the key infrastructure projects that have provided economic development to the country.

Dr. Pawan Singh, Managing Director and CEO PTC India Financial Services (PFS) mentioned that infrastructure financing requires special attention as it’s a different form of financing. He talked about the challenges faced in infrastructure financing while touching upon asset-liability. He also enlightened the delegates about the reforms and regulations undertaken by the government and other institutions in improving infrastructure financing.

He further highlighted that a realistic policy along with adequate support for infrastructure financing is the need of the hour. There is also a need to create robust infrastructure financing institutions.

Dr. D K Aggarwal, President, PHD Chamber of Commerce and Industry in his presidential address mentioned that Infrastructure is one of the success mantras for growth and development of our economy and making India self-reliant. Infrastructure is also an employment generating industry in the country. He emphasised the need to strengthen the local supply chain for making India self-reliant. There is a need to reduce the cost of logistics and update infrastructure technologies.

Due to COVID-19, there has been a hit on infrastructure with the dispersing of the migrant labourers and leftover projects. With rising infections in this new normal, the government has given a significant cushion to this industry with the announcement of the economic package.

“The government needs to spend on infrastructure and, it needs to be front-loaded. This is the right time to spend the money being allocated on infrastructure that will aid the revival of demand and give a boost to India’s infrastructure sector,” said Dr. Aggarwal.

He lauded the efforts and initiatives undertaken by the Ministry of Finance in identifying so many infrastructure projects under the National Infrastructure Project and, these projects have been put on the online dashboard of IIG giving details to all prospective investors. Further mentioning that there is a need to develop long term funds in the infrastructure development that need to come from development financing institutions that will give stability to this industry. We need to create a vibrant bond market that will help raise money for infrastructure projects.

Sanjay Aggarwal, Senior Vice President, PHD Chamber of Commerce and Industry mentioned that every country of the world is facing an economic crisis and, India needs to realize the importance of infrastructure development for the economic growth of the country. Giving an overview of the announcement related to infrastructure development, he mentioned that the government has already analysed that infrastructure is a pivotal part of economic development and there is a need to increase the investments for the same.

He highlighted that money can be pumped in the economy via distributing cash through different forms, which is happening and by the means of infrastructure investment that is growing to create demand for many industries in the country.