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Capital cost for $4.5 tln infra investment a challenge: Goyal

Tuesday, June 26, 2018

Creating infrastructure will need a whopping USD 4.5 trillion investments over the next decade and the cost of the money will be a challenge, finance minister Piyush Goyal said yesterday.

The minister, however, said finding the required finance will not be a "deterrence" for the country. "Infrastructure creation requires USD 4.5 trillion in investments over the next 10 years, Goyal said at a panel of governors at the Asian Infrastructure Investment Bank's (AIIB) two-day annual summit that began here.

He further said the required funds will be available and raising it will not be a "deterrence" for infra creation.

However, in the comments that come amid rising interest rates globally, led by hardening of rates in the US, as also domestically, Goyal flagged the cost of finance as an "important challenge".

Capacity building to handle big infra projects is also a challenge, he added and hoped that the multilateral iInstitutions like the AIIB will help in both the challenges.

However, Singaporean lender DBS chief executive Piyush Gupta said finding finance for infrastructure is not easy as banks, which have traditionally financed infra, have a limited capacity, making bond markets the go-to platform for raising the resources.

But even the bond markets also have their own challenges in supporting greenfield projects and tend to keep away in the initial years, which is critical for a project, Gupta pointed out.

Goyal gave the example of fund raising in the renewable energy space, where government was able to get investments from financiers like Japanese agency Jica and also from large private equity funds. Underlining the need for a stable policy regime, Goyal said in the past, the country faced challenges on this front.

He warend that private capital will "run away". If legal issues hindering project development crop up after signing of contracts.

FinMin terms BoM arrests as ‘aberration’, not hounding bankers
A senior finance ministry official today described the arrests of top officials of state-run Bank of Maharashtra (BoM) last week as an "aberration" and said it should not be construed that "bankers are being hounded".

The economic offences wing of the Pune police last Wednesday arrested BoM's managing director Ravindra Marathe, executive director Rajendra Gupta, zonal manager Nityanand Deshpande, former chairman Sushil Muhnoot and three other officials in a cheating case lodged against real estate developer DS Kulkarni and his wife.

The arrests had riled the entire banking sector so much that national bankers' lobby IBA held an emergency meeting last Friday here and called for setting up an external panel to give clearance to arrest senior bankers. It also had decided to make a representation to the government.

Stating that the BoM incident should not be taken as bankers are being hounded, the official said the state police action is not fair as well.

"It seems to be a bit of an aberration. It should be set right; there is a proper mechanism in place. In the normal course, the state police do not have any jurisdiction on Central government employees," the official said.

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