Financing India’s Infrastructure Build-out

Financing India’s Infrastructure Build-out

India’s large infrastructure deficit and the need for fixing it is almost universally known and accepted. I’ve also written about it in my book Investing in India: A Value Investor’s Guide to the Biggest Untapped Opportunity in the World.

The apathy of the previous government that ruled India for almost a decade and the myriad corruption scandals that have plagued the country resulted in a state of policy paralysis that scuttled almost all large infrastructure projects in India. It appears (at least for now) that the new government in India might reverse some of that policy paralysis and might speed up decision making and clearances. However, government support alone will not help build India’s infrastructure, it will also need to be financed. Even though India has a savings rate that exceeds 30% of GDP, a large portion of that savings is in the household sector. Within the household sector, a large portion of savings are directed toward physical assets like land and gold. Of the portion of household savings that is invested in financial assets, a disproportionate amount is invested in government savings schemes and bank deposits and less than 2% is invested in risk assets like fixed income securities and equities.

What Investors Need To Know When Choosing A Private Equity Manager

investor 1652197064It's no secret that this year has been a volatile one for the markets. The S&P 500 is down 18% year to date, while the Nasdaq Composite is off by 27% year to date. Meanwhile, the VIX, a key measure of volatility, is up 49% year to date at 24.72. However, it has spiked as Read More

The Indian banking system has become completely disillusioned with lending to infrastructure given their experience over the previous seven years and is unlikely to participate in financing it . Households in India are unlikely to meaningfully participate in fixed income securities linked to infrastructure. The equity markets and private equity have fallen out of love w