>INFRASTRUCTURE (IDFC SSKI)

1. Clear case for increasing infra investments…

■ Grossly inadequate capacity

• 15-16% peak power deficits
• 100%+ capacity utilization at ports
• Only 17% of entire national highway network 4-laned

■ A growing economy will only drive up demand for infrastructure services

2. …but rising concerns on funding of private infra spend

■ Access to capital constrained
■ Complete drying up of equity funding as risk aversion took over
■ Global slump in debt markets – aggravated by severe liquidity crunch in India
■ The impact of increasing debt cost on IRRs keeping away pvt. sector from new projects

3. Government to be the saviour

■ Political will strong to push infra capex - consensus across parties on need for infra investments
■ Low inflation regime providing room for pursuing high growth despite risks of a rising deficit
■ Robust financial health of key PSUs/govt. bodies, to ensure implementation of stated plans

To see full report: INFRASTRUCTURE