Better credit rating crucial for infra development: PwC

Gadkari said steps were underway with target for execution of works worth Rs 25 lakh cr in 5 years

Global consultancy firm PwC today said strong state government support and improvement in credit rating will be crucial for attracting foreign capital in infrastructure development.

Road, Transport, Highways and Shipping Minister Nitin Gadkari yesterday said giant steps are underway to overhaul the country's infrastructure with a target for execution of works worth Rs 25 lakh crore in five years. He further said projects worth Rs 6.5 lakh crore have already been awarded.

Replying to queries on credit rating, Manish Agarwal of PwC India said: "The country's credit rating remains a key challenge to attract foreign investors, even though infrastructure funds have significant amounts of dry powder. Therefore, all steps to improve the macro parameters will have a significant impact on Indian infrastructure".

A higher credit rating helps companies to obtain loans at competitive rates from the international market.

Agarwal further said the Smart City SPVs could be innovative in inducting private capital and the governance improvements could come along with, though strong state government support will remain essential to enable this.

The Narendra Modi government, which is completing three years in office, has been focusing on infrastructure creation, a major bottleneck for India's sustained higher economic growth.

"We see that the public sector led infrastructure build out is likely to continue. The NHAI approach of raising private capital through domestic and overseas capital markets, as well as by securitising future cash flows can be implemented in other sectors also," Agarwal opined.