Modi 3.0 plans to bolster infrastructure creation post-election by expanding the infrastructure financing ecosystem

In the interim budget for FY25, infrastructure outlay was increased by 11.1 per cent to 11.11 lakh crore, including Rs 2.78 lakh crore for the Ministry of Road Transport and Highways (MoRTH) and Rs 2.55 lakh crore for the Railway Ministry. Post-poll, the plan for a full-fledged budget for FY25  will look to raise Rs 25000 crore of finance through green bonds - higher than Rs 20000 crore raised through green bonds in FY24.

That going ahead private investment will be a big driver of infrastructure development, is evident from the National Investment & Infrastructure Fund (NIIF) plan to raise  USD 1 billion for its second Private Markets Fund (PMF). The Asian Infrastructure Investment Bank (AIIB) is likely to invest nearly USD 125 million. NIIF manages over USD4.9 billion of equity capital commitments across its four funds- Master Fund, PMF, Strategic Opportunities Fund and India-Japan Fund.

The MoRTH is looking to raise a whopping Rs 60,000 crore in FY 25 through monetisation of Toll Operate Transfer (TOT) highways and NHAI InvIT. In FY 24, Rs 38334 crore was raised from ToT, InvIT and project-based financing. It is significant to mention that under the National Monetisation Pipeline (NMP), an ambitious target of raising Rs 1.08 lakh crore has been fixed for FY25.

The share of privately funded highways in the overall award of projects in FY25 is expected to meet the Government’s target of 10 per cent. NHAI has drawn up a plan to develop 53 listed highways worth Rs 1.2 trillion through BOT. The MoRTH had a healthy award project pipeline of over Rs 45,000 crore as of March 2024. Following the Government’s push for private participation in highways, IRB Infra Development has committed to invest 10000-12000 crore in FY25, to add road capacity through Build Operate Transfer (BOT) mode. The recent modification in concession agreements, according to IRB, has bolstered investors’ confidence by enhancing the bankability of projects. Further, the central Government is putting into place its plan to pare a large portion of NHAI’s Rs 3.4 trillion debt within 5 years. This will free up NHAI’s resources for development in the highways sector.

The energy sector is getting a big green private investment boost. REC Limited, a leader in the power sector in India has availed a SACE-covered green loan for JPY 60.536 billion to finance eligible green projects. In the power sector, besides the airport, Adani Enterprises is firming up its plans to plough USD 1 billion into these businesses. It is in advanced talks with several investors in the US and Europe to raise USD 1 billion for its  Solar Panel business and Mumbai Airport. The company, which is enhancing its focus on green energy, raised USD 750 million through bonds in 2022. 

The investors and Indian corporates engaged in infrastructure development are banking on political and policy continuity for the fructification of the ambitious plan for infra financing push.

(The author is a veteran journalist; views are personal)