Lack of infrastructure holding back India's growth: ADB expert

India's lack of world class infrastructure is holding back its growth and development notwithstanding strengths like political stability and young labour force, said an expert with the Asian Development Bank. India needs more institutions to be involved in financing business, he said. In a blog, Senior Finance Specialist, South Asia Regional Department of ADB, Don Lambert said that in order to bring more funds to the table, the government should establish an institution dedicated to credit-enhancing corporate bonds.

"...infrastructure is the elephant in the room. India's economy has many strengths: dynamic entrepreneurs, political stability, a young labor force. However, its lack of world class infrastructure is holding back growth and development," he said in the blog posted on ADB's website.

Modernisation is critical and expensive so India needs all the options it can get to drive more finance toward energy, transport and other key infrastructure, he said. Recently, Hindustan Powerprojects settled a Rs 1.3 billion (USD 19.6 million) project bond to refinance its 15-megawatt solar power plant in Gujarat's Porbandar. Lambert said India needs a bond-guarantee fund owned by private institutions with minority state ownership despite a plethora of infrastructure financing initiatives.

India in the recent years has seen infrastructure debt funds, infrastructure investment trusts besides Reserve Bank allowing banks to provide partial credit enhancements. The 12th Five Year Plan (2012-17) envisages a huge infrastructure investment of Rs 65 trillion (about USD 1 trillion). The ADB expert wrote that a dedicated institution like a bond guarantee fund would promote efficiency and mitigate mission drift.