Financial impediments to road infrastructure development in India

Abstract

India is the fastest developing economy as indicated by Central Statistics Organization (CSO) and International Monetary Fund (IMF), with “Gross Domestic Product (GDP) growth averaging 7.5 percent between 2014-15 and 2016-17” (Economic Survey 2017-2018, 2018) respectively. And, Investment in infrastructure drives GDP of a country and forms its lifeline. Investment in infrastructure establishes long haul development by propelling production and transportation of the material to the production sites and markets, more employment opportunities and safety for the citizens etc. However short-term political cycles and investment horizons, an absence of feasible financial infrastructure, unseemly tactless, unrefined risk assessment framework and an absence of long-term view; prompts various obstacles to infrastructure growth and development in a country. Infrastructure sector in India is facing major financial issues leading to shortage of investable funds in the vital sector. The companies are confronting huge cost over-run and schedule overrun because of a variety of regulatory hindrances leading them to search for approaches to deal with their financial reporting and provisioning judiciously while meeting fundamental, basic needs in infrastructure. These likewise deflect the private investors to invest in infrastructure ventures. This paper presents the trends in investment, highlighting the relative investment made by Government, Public Private Partnership (PPP) and other models. It further examines the operational and financial hindrances faced in road projects and suggests that by overcoming certain administrative deterrents long-term investors can be attracted to invest in an asset class that produces stable returns over the long haul and dependably gives imperative answers for public needs and significant value for money. This paper proposes that there is a need to quit considering infrastructure only as a fiscal stimulant, but to start thinking of it as a viable and sustainable investment opportunity.