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There is a need to channelise institutional investors' long-term capital for infrastructure funding, National Highways Authority of India (NHAI) Chairman Raghav Chandra said today.
Addressing BRICS Business Forum session here on 'Cooperation in Infrastructure and Infrastructure Financing', Chandra said focus should be on infrastructure development as it is a key pillar of business competitiveness.
"There is almost USD 100 trillion worth patient capital with institutional investors (such as pension funds and insurance companies) which should be channelised for infrastructure," Chandra was quoted in a released issued by FICCI.
Chandra said financing of infrastructure projects comes with several challenges as it needs considerable amount of capital, has long gestation period and the time for break-even is too long.
"Often bank financing is not enough, there is asset liability mismatch and short initial deposit- financing of infrastructure has many hurdles.
"Moreover in India, the corporate debt market is not very developed. It is also not easy to raise capital through foreign debt," Chandra said.
He also deliberated on the different modes of funding infrastructure like PPP and said that there is huge scope and potential for investment in the highways programme.
The New Development Bank should have the scope for credit enhancement, anchor investors and directly finance the projects, he added.
K Ramchand, Chairman, BRICS Business Council Working Group on Infrastructure and CEO, IL&FS, said infrastructure development is one of the major requirements of the BRICS nations.
There is an urgent need for cooperation in physical and IT infrastructure funding in innovative ways through different financial instruments, he said.