CRISIL launches India’s first infrastructure investability index

CRISIL launched the CRISIL InfraInvexIndia’s first investability index, along with the CRISIL Infrastructure Yearbook 2017, a first-of-its-kind annual publication.

The Index & its Report:

  • The index tracks, measures and assesses investment attractiveness, development and maturity of infrastructure sectors.
  • The index is based on four parameters – policy direction, institutional strength and regulatory maturity, financial sustainability, and implementation ease.
  • Being an ascending scale, a score of 1 reflects least investment attractiveness and maturity, and a score of 10 highest investment attractiveness and maturity.
  • India needs to spend over Rs 50 lakh crore on infrastructure creation in key sectors including power, highways, railways, urban infra, ports and airports over the next five years through 2022.
  • This projection factors an average annual GDP growth of 7%, infrastructure investments equal to 5.5% of GDP, and a pick-up in private sector investments after fiscal 2019.
  • The power transmission sector in India is the most attractive to invest in currently, followed by roads & highways, and renewable energy.
  • The urban sector, which is the least attractive right now.

The loopholes:

  • Investments by the private sector and states are likely to remain subdued in the near term.
  • Weak project preparation,
  • Poorly structured contracts with inappropriate risk allocation,
  • Irrational bidding exuberance,
  • Overreliance on bank-led financing in the past have spawned the ‘twin balance-sheet problem’ of deeply indebted developers and gargantuan stressed assets in banking.
  • The takeover of distribution utility losses under the Ujjwal Discom Assurance Yojana (UDAY) and the recent agri-loan waivers have further strained state finances.
  • We need to build up environment to tap pension and insurance funds for investments in infrastructure projects… VGF scheme needs a complete re-examination.
  • Infrastructure sector has suffered in India due to under-investment for a long time.

Steps taken by Govt.:

  • The issue of non-performing assets NPAs
  • To revive stalled projects
  • To facilitate easier exits
  • Front-ending of bankable projects
  • Comprehensive retooling of public-private partnership frameworks – introduce calibrated public-private partnership (PPP) models such as hybrid annuity and toll-operate-transfer in highway
  • Deepening of the infrastructure financing ecosystem.

Source:Business Standard & The Hindu

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