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05
October 2018
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Infrastructure sector (The Total Investment & Insurance Solutions)
The share of private investments in the
infrastructure sector has fallen to a decadal low of around 25 per cent in FY18
steeply down from a high of 37 per cent in FY08, says a report.
Private investments, which averaged 37 per
cent between fiscals 2008 and 2013, fell by 600 basis points (bps) between
fiscals 2013 and 2017 to 31 per cent, which fell a steep 600 bps further to 25
per cent in FY18, as a plethora of stalled projects and stressed assets
dampened investor interest and risk appetite.
"A material ramp-up in government
spending in the past few years has meant the share of private investments in
infrastructure has fallen to a decadal low of around 25 per cent in FY18,"
according to an Crisil InfraIndex.
This means that between fiscals 2008 and 2018,
there was a massive plunge of 1200 bps in private investments.
While the highways sector has seen a revival
in public private partnerships (PPPs), and the renewables sector some buoyancy,
private investments in other infrastructure segments have remained stagnant or
weak, the report said.
"Resumption and broad-basing of private
investments are critical to sustain the share of infrastructure investments at
around 6 per cent of GDP over a medium-to- long-term," Crisil managing
director Ashu Suyash said in the report.
"This requires new PPP frameworks,
expeditious resolution of stressed assets, and steps to deepen financing
sources," she said. According to the index, the highway sector saw the
biggest rise from 6.9 per cent in 2017 to 7.4 per cent in 2018, riding on
private sector interest in the hybrid annuity model (HAM) and success of asset
monetisation under the toll- operate transfer model.
It
said the scores of last year's toppers, power transmission and renewables,
lagged a tad given the high suo motu allocations to public sector in the
former, and policy and pricing headwinds in the latter. Ports and airports saw
an improvement, too, but conventional generation, power distribution and urban
infrastructure continue to lag, it said.
The Total Investment & Insurance Solutions
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