Capital cost for $4.5 trillion infra investment a challenge, says interim finance minister Piyush Goyal

Mumbai: Creating infrastructure will need a whopping $4.5 trillion investments over the next decade and the cost of the money will be a challenge, interim finance minister Piyush Goyal said on Monday. The minister, however, said finding the required finance will not be a “deterrence” for the country. “Infrastructure creation requires $4.5 trillion in investments over the next 10 years, Goyal said at a panel of governors at the Asian Infrastructure Investment Bank’s (AIIB) two-day annual summit that began here. He further said the required funds will be available and raising it will not be a “deterrence” for infra creation. However, in the comments that come amid rising interest rates globally, led by hardening of rates in the US, as also domestically, Goyal flagged the cost of finance as an “important challenge”. [caption id=“attachment_4449521” align=“alignleft” width=“380”] File image of Union minister Piyush Goyal. PIB[/caption] Capacity building to handle big infra projects is also a challenge, he added and hoped that the multilateral institutions like the AIIB will help in both the challenges. However, Singaporean lender DBS chief executive Piyush Gupta said finding finance for infrastructure is not easy as banks, which have traditionally financed infra, have a limited capacity, making bond markets the go-to platform for raising the resources. But even the bond markets also have their own challenges in supporting greenfield projects and tend to keep away in the initial years, which is critical for a project, Gupta pointed out. Goyal gave the example of fund raising in the renewable energy space, where government was able to get investments from financiers like Japanese agency Jica and also from large private equity funds. Underlining the need for a stable policy regime, Goyal said in the past, the country faced challenges on this front. He warend that private capital will “run away”. If legal issues hindering project development crop up after signing of contracts. Goyal said in the last few years, things are changing for the better with tweaks on governance practices and decisive actions. The minister acknowledged that there will be political issues for projects, like popular and political opposition to setting up of a refinery or a nuclear power plant. He also said there is rule of law and powerful institutions like the media and the voice of local populations is heard. “Money is safe in India, because the rule of law prevails, Goyal said, in comments that come weeks after incidents like shutting of a copper plant in Tamil Nadu after violent protests in which 13 people were killed. Goyal also said governments both at the Centre and the states have not defaulted on a single commitment on international borrowing ever.