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India is gearing up for an extensive infrastructure investment program, as rating agency with intentions to allocate nearly Rs 143 lakh crore for infrastructure projects between fiscal years 2024 and 2030, more than double the amount spent over the past seven financial years. A substantial portion of this investment of Rs 36.6 lakh crore, will be dedicated to green initiatives, marking a fivefold increase compared to the spending from fiscal years 2017 to 2023.
The Managing Director and CEO of Crisil Ltd, Amish Mehta, has stated that the agency anticipates India's Gross Domestic Product (GDP) will grow at an average rate of 6.7% in 2031, making it the fastest-expanding economy, which is expected to raise per capita income from USD 2,500 to USD 4,500 by 2031. Upon releasing the 'CRISIL Infrastructure Yearbook 2023', which includes the introduction of the unique national index known as CRISIL InfraInvex, Mehta noted that policy interventions and a favourable investment climate have contributed to the increasing scores of the CRISIL InfraInvex across various sectors.
Four sectors—roads and highways, power transmission, renewable energy, and ports—have received scores of 7 out of possible 10, highlighting the rapid developments in recent years. This phase will create an attractive environment for various stakeholders to accelerate investments across the infrastructure sectors.
Emerging sectors like electric vehicles (EVs), solar energy, wind energy, and hydrogen are expected to gain momentum. Crisil foresees electric vehicles constituting 30% of India's overall automobile sales by 2030. Two-wheelers are projected to lead this trend until 2028, with demand for EV buses being driven by state transport authorities.
Crisil also highlights that the share of renewable energy in India's total capacity is expected to quadruple between fiscal years 2023 and 2030. Solar energy is projected to account for half of the incremental non-fossil energy generation.
The hydrogen sector will attract substantial investments of Rs 1.5 lakh crore between fiscal years 2024 and 2030 since production cost of green hydrogen is roughly double that of fossil-based hydrogen.
Furthermore, Crisil predicts that India's inaugural sovereign green bond issuance will stimulate the growth of the domestic bond market for green investments. Over recent years, there has been a growing appetite for green assets among investors worldwide, prompting Indian companies to seek funding in global markets for their green initiatives.
In conclusion, India is on the cusp of a significant infrastructure investment surge, with a strong emphasis on sustainability and green initiatives. This expansion is expected to drive economic growth, elevate India to a middle-income country, and position it as one of the world's fastest-growing economies. Infrastructure development will encompass various sectors, with a particular focus on electric vehicles, renewable energy, and emerging technologies like green hydrogen. These efforts are likely to attract substantial investments and stimulate the domestic green bond market, aligning India with global trends in sustainable finance.
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