Niti Aayog to lend support in development of 10 big infra projects

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With most domestic infrastructure players over-leveraged and lacking appetite for fresh projects, state governments are banking on foreign investment to meet the­ir infrastructure gaps.

States have asked Niti Aa­­yog to shortlist 10 big infrastructure projects for implementation through the public-private partnership (PPP) route. Project proposals will co­me from sta­tes, sources said.

As per the World Econo­m­ic Forum global competitiveness report 2014, India ranks 84 out of 144 countr­ies in terms of infrastructure quality. There is urgency wi­thin the government to expedite infrastructure building India seeks to boost global competitiveness.

But meeting infrastructure deficit would need hu­ge investment (at least $1.5 tr­i­l­lion over 10 years, as per one estimate), which can’t be mobilised from domestic sources alone.

Domestic banks have tu­r­ned cautious after burning their fingers in infrastructure financing during the UPA regime. The infrastructure sector accounted for 32 per cent of stressed loans in the banking sector at the end of March 2016.

The domestic bond market, which lacks liquidity, is not in a position to meet the funding requirement of the infrastructure either.

India had envisaged $1 tr­i­llion investment during the 12th Plan ( 2012-2017). The private sector was expected to contribute 48 per cent of it, up from 37 per ce­nt in the 11th Plan. But an appraisal of first two years’ experience showed that actual investment during the 12th Plan could fall short of the goal by 30 per cent. Sho­rtfall in private investment is projected at 43 per cent.

Industry experts have ha­i­l­ed the envisaged involvement of Niti Aayog in infrastructure development.

“Aayog’s involvement is welcome. It can get states to prepare better PPPs, which leverage limited public sector capital, to unlock private sector efficiency,” said Manish Agarwal, who leads infrastructure advisory at PwC, a consulting firm.

A senior government official said the proposal to shortlist 10 big projects on priority basis was discussed during a recent meeting of Aayog functionaries and representatives from various states. The official said the list of 10 big infrastructure projects would be prepared after taking into consideration the details of such big projects that would be provided by the states in the coming weeks.

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