News Column

India : Central bank rule handicaps India's infrastructure hopes

September 1, 2014



A central bank ban on Indian banks buying new issues of infrastructure bonds has handicapped Prime Minister Narendra Modi's chances of gathering billions of dollars needed for mega-projects through the bond market.

Elected in May, Modi has made heavy infrastructure investment and construction of affordable housing for all by 2022 key elements of a reform agenda aimed at getting India's lumbering economy to grow a lot faster.

Meeting the housing goal alone would need investment of at least US$2 trillion, according to a KPMG report released last month.

Faced with those funding needs, the government in mid-July encouraged banks to issue bonds to fund infrastructure by exempting these bonds from reserve requirements, in order to enable them to extend cheaper loans to the cash-starved sector.


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Source: TendersInfo (India)


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