Indian Infrastructure Public and Private Investment at a Ten-Year Low

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According to a report by the World Bank, in 2015 India hit a decade low level of investment in public infrastructure from sources both public and private, foreign and domestic. The reduction appears akin to similar contractions in investments seen in other distressed emerging economies, like China and Brazil.

The World Bank’s analysis of India’s investments came as part of its latest annual report on private participation in infrastructure, which the bank released on Monday. According to the report, “India recorded a 10-year low in investments, as only six road projects, usually a rich source of PPI [private participation in infrastructure] over the past 10 years, reached financial closure.”

Global investments in India in 2015 reached a mere $111.6 billion. From 2010 to 2014, the average had been more than $12.5 billion higher at $124.1 billion. According to the report, the contraction was effectively a spillover from lower investments in infrastructure around the entire world, but the downturn had a greater effect on the economies of nations like India. Infrastructure investments in 2015 were 10 percent lower around the world than the previous five-year average. Most impacted by this contraction were India, China, and Brazil.

Clive Harris, Practice Manager for Public-Private Partnerships at the World Bank said of the report, "The data finds that investments in other emerging economies increased rapidly to $99.9 billion, representing a 92 percent year-over-year increase.”

As in India, Brazil and China also experienced significant reductions in PPI. Brazil went from $47.2 billion in 2014 to less than a tenth that number at $4.5 billion in 2015. Similarly, Chinese investments fell beneath their 5, 10, and 20 year averages.

On the other hand, while the dollars spent on infrastructure investments in these nations were particularly bad in 2015, they still led with the number of projects put up for public investment. Of 300 projects put up for PPI, 131 of them (some 44 percent) originated in China, India, and Brazil. Yet, the cash amount raised by investment was just 10 percent of the global total (it had been 54 percent in 2014).

Thirty-six of those projects originated in India. Interestingly, many of the projects (26 out of 36) pertained to renewable energy. Counter-intuitively, this accounted for just $2.0 billion of the total investments made in India.