Financing Infrastructure in India

Driving infrastructure development, notably mobilizing financial resources for infrastructure projects, has been challenging in many countries. This study includes two parts: an empirical analysis of macroeconomic risks associated with infrastructure booms, and a case study of four emerging economies about their practice of funding infrastructure development. The study shows that (i) there is no empirical evidence that rapid infrastructure growth would undermine contemporary macroeconomic performance, implying that room is created to accommodate infrastructure booms without compromising fiscal and external sustainability; (ii) banks may play an important role in financing infrastructure, but caution is needed to avoid directed lending and regulatory forbearance that the authorities may use to promote financing; (iii) capital market development is important to accommodate the usually high financing needs, and encouraging private investors to move into infrastructure would require regulatory and institutional improvements; and (iv) public support, including credit guarantees, may help bolster investors'' confidence, but the authorities should carefully monitor and manage fiscal risks.Economic growth;Electric power;Emerging markets;Public investment;Transport;bonds, investors, bond, bond market, stock market, commercial banks, infrastructure bonds, private capital, financial sector, institutional investors, private investment, corporate bond, corporate bond market, financial system, foreign investors, crowding out, foreign currency, foreign companies, gross fixed capital formation, financial markets, fixed income, fixed capital, stock exchange, cost of capital, credit guarantees, bond markets, bond insurance, minority shareholders, financial institutions, domestic bonds, foreign equity, private equity, reserve requirements, guarantee funds, retained earnings, minority shareholdings, minimum revenue guarantees, coupon rate, present value, corporate bonds, bond funds, domestic bond, yankee bond, international banks, yankee bonds, foreign bonds, domestic investment, derivatives markets, interest rate derivatives, commercial basis, foreign investment, financial assets, convertible bonds, investment spending, foreign capital, net present value, bond issuance, stock market capitalization, original maturity, direct investment, investment fund, domestic financial sector, private placement, trade credit, foreign direct investment, local bond markets, investment needs, credit markets, investment promotion, local bond, currency risk, working capital loans, financial instruments, hedging, investment promotion law, financial resources, regulatory framework