India eyes G20 group for investment in infrastructure plans
The railway network could emerge as a vital engine of growth but is in dire need of investment as there is a need to expand the ageing network.
NEW DELHI: India has proposed that the G20 group be used as a platform for matchmaking the private sector, including pension funds which are sitting on a huge cash pile, with countries that are in dire need of funds for developing infrastructure.
If this plan is implemented, India would be one of the key beneficiaries and be able to attract financing for its massive infrastructure needs from pension funds, global companies, which are looking at attractive investment options that promise a stable and healthy rate of return.
The issue is learnt to have been flagged at a recent meeting of G20 sherpas in Turkey, in which railways minister Suresh Prabhu represented India. "We can create a platform for matchmaking investors and countries which need funding," said an official, who did not wish to be identified, adding that the plan is in its initial stages but is being pursued vigorously.
The G20, in its meeting in Brisbane, agreed to set up a Global Infrastructure Hub with a four-year mandate. The hub is expected to contribute to develop a knowledge-sharing platform and network between governments, the private sector, development banks and other international organizations.
The hub is expected to foster collaboration among various groups to improve the functioning and financing of infrastructure markets.
The latest proposal from India is on similar lines but more focused on matching large investors with countries, which need long-term funds for shoring up infrastructure.
There are several large investors such as pension funds in Australia, Japan and Canada, which are on the lookout for investment options. Australia has $2 trillion in pension funds and could be keen to invest in robust infrastructure projects in the country.
The Narendra Modi administration is planning to increase public spending in vital infrastructure projects to boost growth and create jobs. Since the government is hamstrung by a tight fiscal situation, courting overseas investors including companies with large cash reserves could help in bridging the funding needs.
The massive railway network could emerge as a vital engine of growth but is in dire need of investment. There is a need to expand the ageing network as well as decongest it for faster movement of goods and passenger trains. Estimates show that investment in railways could help add 2-3% to the country's GDP, triggering a revival in sectors such as steel and cement and faster turnaround time for the country's exports.
To enable funding from abroad, there would be a need to set up investment arms which can invest in various projects. For example, the India Railway Finance Corporation (IRFC), could be drafted in to use its expertise on this crucial issue. Experts said investors would also want to be assured of returns and safety of investments.
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