For India, multilateral cooperation for facilitating investment in infrastructure is the need of the hour.
According to the Global Infrastructure Hub’s (GIH) Infrastructure Outlook 2017 forecast, about US$ 94 trillion is needed for infrastructure investment from 2016 to 2040. Additionally, the report suggests that Asia is likely to account for 54 percent of the global infrastructure investment. It is also important to note that the world’s 500 largest asset managers’ assets under management (AuM) reached US$ 104.4 trillion for the first time in 2019. Despite noting the importance of infrastructure building, a persistent infrastructure gap still exists.
The importance of infrastructure required for developing countries as a way of stimulating growth was recognised by the G20 countries for the first time during the 2012 G20 Los Cabos Summit. The Los Cabos Action Plan identified investment in infrastructure as a source to increase productivity and living standards in the medium term by addressing bottlenecks in countries such as Argentina, Australia, Brazil, India, Indonesia, Mexico, Saudi Arabia, South Africa, and the United Kingdom (UK). The discussion for creating long-term financing for infrastructure surfaced again at St. Petersburg G20 Summit in 2013. In this regard, joint action was to be taken to create a favourable environment for capital flows for long-term investment from the global capital markets and also through private investments in infrastructure. In 2014, at the Brisbane G20 Summit, India along with the other members agreed on the creation of a Global Infrastructure Initiative to help drive quality infrastructure investment across the G20 to complement the work of international development banks and initiatives in member countries. At this summit, India further enlisted global support for accelerating “the creation of next-generation infrastructure, which also includes digital infrastructure, and (ensuring) access to clean and affordable energy” through the Global Infrastructure Hub (GIH).
The G20 members emphasised the importance of lowering the barriers to investment and improving the availability of investment-ready projects.
The G20 members have further emphasised the importance of lowering the barriers to investment and improving the availability of investment-ready projects. This includes developing a knowledge-sharing network to allow members to share information on infrastructure projects between international organisations, development banks and governments. To ensure that infrastructure investments by the private sector and governments maximise the positive impact of infrastructure, the G20 leaders in the Osaka Summit 2019 endorsed six voluntary and non-binding Quality Infrastructure Investment (QII) Principles by GIH. Furthermore, they agreed to develop an effective approach to implement the G20 Lending Practices on Promoting and Prioritising Quality Investment. In 2021, the International Forum of Infrastructure Bodies (I-Bodies) by GIH, highlighted the urgent need to build a resilient infrastructure to drive post-pandemic recovery that embodies the message of “building back better”.
The continued encouragement of the Indian government in this domain was observed in the report of the Infrastructure Task Force by the Department of Economic Affairs (2019), which highlighted the importance of attracting private capital, revitalising bond and credit markets, and re-examining existing investment guidelines for potential lenders of long-term funds such as insurance companies and pension funds. With regard to increasing investment opportunities, India’s Finance Ministry launched the “National Infrastructure Pipeline (NIP)” in 2019—with 6,835 projects—which require a major increase in funding, both from the government and the private sector. Through the years, India has been able to develop options for long-term investments in infrastructure such as Infrastructure Debt Funds (IDFs), Infrastructure Investment Trust (InvITs), and the National Investment and Infrastructure Fund (NIIF) which secured around US$ 4 billion of capital commitments till 2020. Some of India’s major initiatives for infrastructure development include—
Given the infrastructure development gap paradox, multilateral cooperation for facilitating investment in infrastructure is of utmost importance for India. Thus, recognising and furthering the work related to G20 Principles for Quality Infrastructure Investment will be crucial for India’s G20 presidency in 2023.
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Shruti Jain was Coordinator for the Think20 India Secretariat and Associate Fellow Geoeconomics Programme at ORF. She holds a Masters degree in Public Policy and ...Read More +