FM Nirmala Sitharaman stresses on attracting private investment to develop urban infrastructure

Finance Minister Nirmala Sitharaman on Sunday underlined the need for embracing innovative strategies to attract private investment, bridge financing gaps and foster sustainable development of infrastructure in cities.

Addressing the 'G20 Infrastructure Investment Dialogue', the minister said that the situation with regard to financing infrastructure has become even more challenging in the wake of monetary policy tightening in key markets.

The tight monetary policy leads to the hardening of interest rates and the burgeoning debt repayment burden.

Against this backdrop, she said, "Innovative financing and funding mechanisms for cities could have significant potential to fill the increasing (funding) gaps.

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"It can complement the pool of funds available for infrastructure in addition to public investment and financing provided by Multilateral Development Banks (MDBs), she added.

"We need alternate solutions to leverage private sector participation in this context. Innovative financing instruments such as blended finance, structured project finance, securitization, thematic bonds, biodiversity offerings...and local currency finance, are some of the needs," Sitharaman said.

The minister also made a case for developing an ecosystem to improve the creditworthiness of urban local bodies through appropriate policy and regulatory framework.

"...our investment decisions... will shape the future of our cities and determine the quality of life for future generations," the minister stressed.

In her opening remark, the minister stressed on the need to recognise the potential of infrastructure in delivering public good and enabling shared prosperity which is the core value underpinning the overall theme of India's G20 Presidency - 'Vasudhaiva Kutumbakam'.

Delivering quality urban infrastructure is one of the most pressing challenges for cities in a rapidly urbanising world.

Today, Sitharman said, 55 per cent of world's population lives in urban areas, which is expected to increase to 68 per cent by 2050.

Massive investment in infrastructure will be needed to accommodate this growth, she said.

Sitharaman said GIFT International Financial Services Centre (IFSC) has been designated as a special international financial jurisdiction with trusted business regulations, competitive tax structure with focus on ease of doing business.

She informed the gathering that GIFT IFSC has more than 400 entities registered across various business segments, including banks, capital markets, insurance, fintech, aircraft leasing, bullion exchange, and is rapidly growing with healthy and increasing participation of international and domestic financial institutions.