The Asian Development Bank (ADB) is to provide a total of US$500mn in loans to India to support public-private partnerships in the infrastructure sector.
The loans are intended to boost efforts to improve India's inadequate infrastructure, which has been referred to as the country's 'Achilles heel', preventing sustainable economic development.
"India needs to double its current level of investment in infrastructure and to increase and mainstream public-private partnerships,” comments Cheolsu Kim, principal financial sector specialist at ADB.
ADB will be providing the funds to the government-owned India Infrastructure Finance (IIFCL) in multiple tranches over the next four years. The IIFCL will be providing funds at commercial terms with over 20-year maturity for infrastructure projects, a tenor length not provided in the market as yet.
The IIFCL has also set up a financing plan for the fiscal year 2007-11 for US$6bn.
Around half of these funds will be raised in the Indian domestic market through insurance, pension funds and national savings schemes. The remaining amount will be sourced from the international capital markets, bilateral and multilateral sources.
To date the Indian government has been the main provider of infrastructure, but public funds will not be sufficient to meet the estimated US$475bn-worth of investment needed between now and 2012 to radically improve the country's roads, railways, and airports.
Last Updated January 11, 2008
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