Private infra investment share dips to 25% in FY18 from 37% in FY08

Mumbai: The share of private investments in the infrastructure sector has fallen to a decadal low of around 25 per cent in FY18 steeply down from a high of 37 per cent in FY08, says a report.

Private investments, which averaged 37 per cent between fiscals 2008 and 2013, fell by 600 basis points (bps) between fiscals 2013 and 2017 to 31 per cent, which fell a steep 600 bps further to 25 per cent in FY18, as a plethora of stalled projects and stressed assets dampened investor interest and risk appetite.

"A material ramp-up in government spending in the past few years has meant the share of private investments in infrastructure has fallen to a decadal low of around 25 per cent in FY18," according to an Crisil InfraIndex.

This means that between fiscals 2008 and 2018, there was a massive plunge of 1200 bps in private investments.

While the highways sector has seen a revival in public private partnerships (PPPs), and the renewables sector some buoyancy, private investments in other infrastructure segments have remained stagnant or weak, the report said.

"Resumption and broad-basing of private investments are critical to sustain the share of infrastructure investments at around 6 per cent of GDP over a medium-to- long-term," Crisil managing director Ashu Suyash said in the report.

"This requires new PPP frameworks, expeditious resolution of stressed assets, and steps to deepen financing sources," she said.

According to the index, the highway sector saw the biggest rise from 6.9 per cent in 2017 to 7.4 per cent in 2018, riding on private sector interest in the hybrid annuity model (HAM) and success of asset monetisation under the toll- operate transfer model.

It said the scores of last year's toppers, power transmission and renewables, lagged a tad given the high suo motu allocations to public sector in the former, and policy and pricing headwinds in the latter.

Ports and airports saw an improvement, too, but conventional generation, power distribution and urban infrastructure continue to lag, it said.