Characteristics of infrastructure financing projects

By Rajalakshmi Rahul on June 7, 2012

In order to compete with other nations in the world India needs to improve its standards of constructing perfect infrastructure possessions. In order to host such possessions there needs to be a large amount of investment in every area of infrastructure development such as rails, roads, ports, buildings, etc (Ramachandran, 2007). The main requirement for initiating such construction projects for development of India is finance. In recent times several infrastructure financing companies have come forward to finance infrastructural development projects in India.

The projects which have been listed under the segment of infrastructure construction are entirely different from the expansion and modernization of tasks by many companies (Carter. et. al, 1996). The characteristics of Indian infrastructure financing projects are as follows (Sarkar, 2009):

Longer maturity

Financing for infrastructure needs to have enough maturities ranging from 5 to 40 years. Such ranging can essentially reflect the accessing options and estimating the life of created infrastructure in actual context.

Larger amount

Infrastructure finance is included with different set of initiatives which essentially measure the range of amount needed in order to complete the projects in the local rationalities.

Higher risk

When large range of amounts are invested for long duration of time a risk may be elevated which can cause immense uncertainty in its course.

Fixed and low real returns

The financing for infrastructures is mostly linked with the scale of economies and annual returns of the projects under maintenance. Further perfect returns must be judged before financing a project of constructing infrastructure essentially. Apart from such characteristics, issues such as capital risks initiates to reduce such risk are considered to the greater extent in order frame the perfect financing action for constructing the infrastructure which is about to construct in the localities of India.

References

  • Ramachandran K S (2007), Economic Environment of India, Swanthantra Bharat Press, New Delhi.
  • Sarkar A N (2009), Enhancing Global competitiveness: Advantage India, International Publishing, New Delhi,
  • Carter L, Barger T and Kuczynski I (1996), Leasing in Emerging markets, The World Bank and International Finance Corporation, USA.
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