Funding highways through bonds

22 JUL,2019 | MEDC


 

The government plans to raise money by issuing bonds at attractive returns, and encourage greater private participation in the road sector. As Highway Minister Nitin Gadkari aptly put it, there is henceforth no free lunch. People will need to pay for quality services provided by the government. To deal with its financial constraints, the government has shifted focus to the BOT (Build-Operate-Transfer) projects and is working out modalities to bring new norms in this construction model. The global financial crisis resulted in stricter regulations on banks and their lending practices. Thus, infrastructure projects can no longer be funded by traditional debt alone. Other innovative ways of funding – such as project bonds – will need to be considered and implemented. The key factor behind the success of such endeavours is the ability to build a long-term relationship with sceptical investors.

*Photo Credit: Google

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