Crisil targets Rs. 43 lakh-cr for Indian infra

In its recent projection for the Indian infrastructure investment requirement, rating agency Crisil said that the country needs a staggering sum of Rs 8.6 lakh-cr per annum amounting to a whopping investment requirement of Rs. 43 lakh-cr over the next 5 years, adding that 70% percent of the amount will be required in just three sectors - power, transportation, and urban infrastructure. In power, generation (thermal and renewable) will continue to account for the largest share of the investments, followed by transmission, whereas in the transportation sector, investments will be driven towards building national highways and state roads. Given the concerns of asset-liability mismatches and group exposure regulations of the Reserve Bank of India, banks alone cannot fulfill the needs whereby the banks also need to raise large amounts of equity capital at a time when their profitability has diminished - which, in turn, reduces their ability to raise capital through internal accrual. There is a strong need for innovative structures and credit enhancement mechanisms, which reduce the risk in infrastructure projects and make them more palatable to investors.