Reportedly, the Finance Minister announced the Government’s decision at the annual International Monetary Fund (IMF) meeting held in Washington on October 19. She added that a task force had been set up in the Finance Ministry to map out an infrastructure pipeline for the coming five years. She laid emphasis on prioritising infrastructural growth of the country by stating that the current government would invest more on the segment compared to spending in the past 10 years.

India has already launched Infrastructure Debt Funds (IDFs), Real-Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), and put forth a strong blueprint for municipal bonds—to act as financial catalysts for further development.

Commenting on the announcement, Madan Sabnavis, Chief Economist, CARE Ratings, said, “There are two aspects to the success of projects in the infra space. The first is funding and here, when the FM speaks of Rs 100 trillion being spent, it is encouraging. However, we should remember that this amount has to come primarily from the private sector and hence government support will be only incremental. For the private sector to step in, we need viable projects with good credit rating to access the bond market.

Here, the FM’s announcement of having a credit enhancement agency is pragmatic. Banks today are not in a position to lend much to the infra sector given that NPAs are high in this segment. Thus, funding private projects will be critical to germinate such projects.”

Various models and initiatives have been adopted by the Government including the PPP model, the Asset Recycling Model (ARM) and the National Investment and Infrastructure Fund (NIIF). ARM is a useful model that allows the revamp or modernisation of existing infrastructure while offering the required funding to back upcoming projects. On the other hand, NIIF aims to garner investments from both national and international players, directed towards the infrastructure segment. The development of brownfield assets as a distinct asset class is also on the books as it will permit the Government to utilise them for further investment.

The finance minister also mentioned the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), saying the scheme would cover a total of 145 million beneficiaries. The significance of India’s rural economy was thus highlighted. To promote farmers to use organic seeds and natural fertilisers, the Government is set to introduce the Zero Budget Natural Farming model. This is expected to double farmers’ income by 2022.