Capital outlay for renewables, roads to surge 33% in 2 years: Crisil

Mumbai: Infrastructure building in India is set to gather steam with road construction rising by a quarter and renewable energy rising by a third in the next two years as companies benefit from asset monetisation and reduced leverage, said rating company Crisil.

Road project building is likely to rise to as much as 13,000 kilometres a year, from about 10,000 kilometres, led by the Hybrid Annuity Model (HAM), said Crisil. HAM was implemented in 2016 which reduced the risk of completion of a road project to encourage companies to bid for it.

"Investor interest has been encouraging, with Rs 75,000-80,000 crore raised through equity and asset monetisation in the past two fiscals in both sectors,'' said Manish Gupta, senior director and deputy chief ratings officer Crisil.

"Continued focus on asset monetisation and equity raising, along with healthy cash flows will keep the capital structure balanced in both sectors."

Infrastructure building in India has turned easier with companies managing to find investors to buy into InvITs. These are securities sold with the backup from the assets' cash flows. Assets under management of road InvITs almost doubled to Rs 1.3 lakh crore between December 2022 and July 2023.