Tower cranes operate in a residential building construction site in Noida, Uttar Pradesh, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

Private Investment In Infrastructure Hit By Delays, Stressed Assets: Crisil

Private investments in infrastructure hit a 10-year low due to stalled projects and stressed assets, according to a report published by rating agency CRISIL.

The share of private investments in infrastructure spending stood at around 25 percent in the previous financial year, the research report said, adding that the share had averaged about 37 percent between in the five years through March 2013 and fell around 600 basis points between in the four years through March 2017.

CRISIL noted that the decline dampened investor’s interest and risk appetite.

Private investment in infrastructure accounted for an estimated Rs 20 lakh crore—or nearly a third of the estimated Rs 60 lakh crore invested in India’s infrastructure—between April 2008 and March 2017, according to the report.

Infrastructure spending declined from about 7 percent of GDP during the financial years 2008-2012 to about 5.8 percent in 2013-2017. It could fall even more if private investments aren’t spurred.
CRISIL Research Report.

“Resumption and broad-basing of private investments has become critical to sustain the share of infrastructure investments at about 6 percent of GDP over a medium-to-long term, CRISIL’s Managing Director and CEO Ashu Suyash said in the report, adding that it requires new Public-Private Partnership frameworks, expeditious resolution of stressed assets, and steps to deepen financing sources.

“Critical sectors such as railways and urban infrastructure failed to make fast-enough progress to attract private monies despite their size and potential,” CRISIL said. “While the viability of power distribution remains critical to the sector value chain,” it added.

Infrastructure investments have a positive impact on economic growth, productivity and competitiveness are well-established. But accelerating India’s infrastructure investment to about 6 percent of GDP over a medium-to-long-term has become vital. 
CRISIL Research Report

A revival and sustainable acceleration of public-private partnerships in infrastructure have become a sine qua non, CRISIL noted, adding that it will require redrawing of the framework in “double-quick time” and paving the path for private investments.