Banks, lending agencies vie for a share in $1 trillion infrastructure pie

Chennai:

As India is planning to bridge the infrastructure deficit estimated worth Rs one trillion over the next 10 years, banks, international lending agencies and financial institutions are vying for a share in the pie.

Speaking at the South India Infrastructure Investment Summit 2011, experts from the financial sector highlighted the need for external commercial borrowing for funding these projects.

Siddarth Rath, head of infrastructure business, Axis Bank, said fund raising will be a key issue in infrastructure development and the country should look into external commercial borrowing for funding these projects.

 Earlier delivering a special address, Dato Seri S Samy Vellu said time is right to make Malaysia a center for sourcing long-term debts for meeting part of India’s infrastructure financing needs.

 “A significant number of Indian companies and institutions could join hands with their counterparts in Malaysia to create an infrastructure based fund which can be listed on the Malaysian stock exchange,” he suggested, adding this will provide the much needed financial support for Indian infrastructure which may exceed $30 billion in next five years to sustain the economy.

Harsh Agarwal, executive director of Morgan Stanley infrastructure stressed on the need for clearing policy hurdles instead of focusing on external commercial borrowing.

Hidenobu Teramura, Director, Financial Co-operation Division, Trade & Economic Co-operation Bureau, Ministry of Economy, Trade & Industry(METI), Government of Japan, said India spends only one-eighth of the investment China makes in infrastructure development.  “Japan has national and international experience in developing infrastructure facilities and India could make use of that in several sectors like environment and energy conservation,” he added.

Raj Kumar Khatri, Secretary, Infrastructure Development Department, Karnataka said his state, which  has envisaged an investment requirement of $6 billion every year, is proposing for an `Infrastructure Development and Regulatory Bill, to facilitate, regulate and mitigate risk in infrastructure investments.

S. K Goel, Chairman, South India Infrastructure Investment Summit 2011 and Chairman and Managing Director, India Infrastructure Finance Co Ltd, said 50 per cent of the estimated $1 trillion investment requirement for the infrastructure development in the country has to come from the private sector. Innovative funding mechanisms should be deviced to bridge the demand supply gap in the financial sector, he said.