Creating infrastructure will need a whopping $4.5 trillion investments over the next decade and the cost of the money will be a challenge, Finance Minister Piyush Goyal said on Monday.
The Minister, however, said finding the required finance will not be a “deterrence” for the country.
“Infrastructure creation requires $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 institutions 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 warned that private capital will “run away”. If legal issues hindering project development crop up after signing of contracts.