NIP investments to fall short of target, range between Rs 24-27 lakh crore in first 2 years, says Icra
About 39 per cent of the projects will be implemented by the Centre, 40 per cent by the state governments, and the balance 21 per cent by the private sector. New Delhi: The government’s ambitious target of Rs 111 lakh crore investments under the National Infrastructure Pipeline (NIP) between FY2020-25 is likely to see severe near-term headwinds due to the COVID-19 pandemic, ratings agency Icra said on Friday. While even prior to the pandemic, the NIP was already quite ambitious and challenging, but it seemed achievable with a significant push towards infrastructure, it said, adding the COVID-19 outbreak has now made it a daunting task to achieve the target.
The government’s priority will be to fight the pandemic and the disruptions caused due to it. With the fiscal constraints, the investment in infrastructure may get pushed back, particularly from the state governments, it said.
Investments from the private sector are also likely to be deferred or scaled down in the current environment.
Icra’s Senior Vice-President and Group-Head, Corporate Ratings, Shubham Jain said, “In the current environment, the infrastructure investment in FY2021 would fall short of the plan, and consequently to achieve the NIP target a significant step-up of investments will be required in the later part of the plan.”
“Against the total infrastructure investment of Rs 36 lakh crore envisaged in the first two years of NIP (FY2020-FY2021), the actual investment is likely to range between Rs. 24-27 lakh crore,” he said.
Consequently, to achieve the targeted investments in the remaining four years (FY2022-FY2025), an average annual investment of over Rs 21 lakh crore will be required, he noted.
The total infrastructure investment in India between FY13 to FY19 stood at Rs 57 lakh crore.
Compared with this, the NIP has planned an investment of over Rs 111 lakh crore during FY20 to FY25 — which is higher by 109 per cent.
About 39 per cent of the projects will be implemented by the Centre, 40 per cent by the state governments, and the balance 21 per cent by the private sector.
The NIP envisions a significant scale-up of investments from FY21 onwards, with an investment of Rs 21.5 lakh crore this fiscal compared to Rs 10 lakh crore of investments made in FY19, Icra said. The overall funding mix for the NIP is likely to be through the Central and state budgets, borrowings and private sector participation.
About 42-46 per cent of the pipeline is expected to be financed through the Centre’s and state budgets; 29-35 per cent through debt raised from banks/infra NBFCs/bond markets, and 7-15 per cent from private developers’ equity, external aid from multilateral and bilateral agencies and internal accruals of PSUs, the agency said.
There is a financing gap of 15-17 per cent estimated, of which 6-8 per cent is estimated to be bridged by asset monetisation and new development finance institutions (DFIs). The source of funding for the balance 10 per cent remains uncertain as of now, it added.
Source: indiatimes.com
