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Agenda

1. India’s USD 5tn Economy Dream

2. The National Infrastructure Pipeline

3. Roads

4. Renewables

INDIA’S USD 5TN

ECONOMY

DREAM

India’s Growth Trajectory

Motivation behind the National Infrastructure Pipeline

▪ Rapid urbanisation and changing demographic requirements

▪ Strengthening supply side reforms

▪ Increasing global competitiveness and attracting investments

▪ Boost employment and income generation

▪ Meeting the Sustainable Development Goals by 2030

Employment

Growth

Investments

-10.0%-8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%10.0%12.0%

0.0

50.0

100.0

150.0

200.0

250.0

Gross Domestic ProductConstant Prices, 2011-12

Source: CEIC, IMF, Central Statistics Office, Report of the Taskforce on National Infrastructure Pipeline

▪ Despite high growth projection, India’s USD 5tn

economy vision remains highly ambitious, especially

if the INR depreciates against the USD

▪ Government of India is intent on achieving the

target primarily through infrastructure development

due to the high multiplier effect

Fixed Capital and Economic Output across BRIC Nations

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Gross Fixed Capital Formation% of GDP

Brazil Russia India China

Note: For India, the year reflects the fiscal year (ending in March of following year) – for example 2020 means FY2021; adjustment made for comparisonSource: CEIC, World Bank

0.00

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

16,000.00

18,000.00

20,000.00

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Real GDPin USD bn

China India Brazil Russia

▪ China’s gross fixed capital formation as a percentage of GDP far exceeds its counterpart BRIC

nations, and even advanced economies such as the United States

▪ The Chinese economy, in 2020, was almost four times the size of the Indian or Brazilian economy

Pace of Capital Expenditure Requires Acceleration

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Gross Fixed Capital Formation

INR tn % y/y change

India would need to spend USD 4.5tn on

infrastructure development by 2030, to become

a USD 5tn economy by 2025 (and continue that

path until 2030). However, current yearly

spending is less than USD 100bn.

The budget for capital expenditure has registered an

increase of 34.5% y/y in comparison to budget

estimate for FY2021, and an increase of 26.2% y/y

when compared to the revised budget.

Source: CEIC, IMF, Central Statistics Office

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

Capital ExpenditureYTD, % of Budget Estimate

Foreign Investments

Source: CEIC, Reserve Bank of India

In FY2021, India attracted total investments

inflows worth USD 80.1bn, the highest on record,

marking an increase of 80.3% y/y. Foreign direct

investments (FDI) to India, on the other hand,

declined 1.9% y/y in FY2021.

The share of foreign investment in construction

and infrastructure activities increased from 5% in

FY2020, to 15% in FY2021. As of Q1 FY2022, the

sector has received 5% of the total investments.

-100.0%

-50.0%

0.0%

50.0%

100.0%

150.0%

200.0%

0.010.020.030.040.050.060.070.080.090.0

FY

2014

FY

2015

FY

2016

FY

2017

FY

2018

FY

2019

FY

2020

FY

2021

Foreign Investment

Total Investment, USD bn

Direct Investment, USD bn

Total Investment, % y/y change, RHA

Direct, % y/y change, RHA

Top 10 Industries for Foreign Investments

Automobile Industry

Computer Software andHardware

Services Sector

Metallurgical Industries

Construction InfrastructureActivities

Trading

Glass

Hotel and Tourism

Chemicals, excl Fertilizers

FY2020

(Inner)

FY2021

(Middle)

Q1 FY2022

(Outer)

The Post-Lockdown Infrastructure Activity Scorecard

Source: CEIC, Info Edge, Department for Promotion of Industry and Internal Trade, Reserve Bank of India, Central Statistics Office, Ministry of Road Transport and Highways, Ministry of Commerce and Industry, Ministry of Railways

Jun-

17

Sep-

17

Dec-

17

Mar

-18

Jun-

18

Sep-

18

Dec-

18

Mar

-19

Jun-

19

Sep-

19

Dec-

19

Mar

-20

Jun-

20

Sep-

20

Dec-

20

Mar

-21

Jun-

21

THE NATIONAL

INFRASTRUCTURE

PIPELINE

National Infrastructure Pipeline – INR. 111tn Investments by FY2025

KEY HIGHLIGHTS

INR 111tnPlanned Capital

Expenditure

6 YearTime Period

12 MinistriesSpan

SECTOR WISE BREAK UP UNDER NIP

Energy, 24%

Roads, 18%

Urban, 17%

Railways, 12%

Irrigation, 8%

Rural Infra, 7%

Social Infra, 4%

Digital Infra, 3%

Industrial Infra, 3%

Agriculture & Food Processing , 2%

Ports, 1%Airports, 1%

FINANCING THE NIP

Budgetary

Sources

Private or Extra

Budgetary Sources

Innovative and

alternative

financing sources

Central Budget

(18-20%)

Financing by Banks (8-

10%)

Innovative and

alternative

financing (15-17%)

Bond Markets (6-8%)

State Budget

(24-26%)

Infrastructure NBFCs

(15-17%)

PSU Accruals, Equity and

Others (8-15%)

REFORMS:

➢ PPP

➢ Financial Reforms

➢ Sector Specific Reforms

Source: National Infrastructure Pipeline, National Monetization Pipeline, CARE Research

ROADS

The Road Ahead…

NIP SNAPSHOT

18%Share of total NIP value (INR 111tn)

1820+NH Projects identified

INR 20.34tnCapex over FY20-FY25

National highways

Private Sector

Innovative

Financing

Technology

CURRENT STATUS VISION 2025

132,000 km

15%

Limited asset

monetization

Limited

technology use

219,000 km

39%

INR 1.6tn

Increased use of

Fastag, RFID

devices

Strong Pace of National Highway Construction

National Highways – Projects Awarded and Completed

1594817055

5493

8948

1096510000

8231

982910855

10237

1332712000

2016-17 2017-18 2018-19 2019-20 2020-21 2021-22(P)

Award (in km) Construction (in km)

Source: MoRTH, CARE Research

• Initiatives such as Bharatmala Pariyojana boost connectivity

• Government support was extended to contractors and concessionaires during the pandemic.

• Pace of construction to touch 15,000 km/year to achieve the NIP vision

Government Funded Modes Dominate

Mode of Projects Awarded Increasing Debt in NHAI

EPC and HAM are the more preferred mode of

project awards over the past few yearsResulting in increasing debt on NHAI’s balance

sheet

0.78

1.22

1.79

2.49

3.17

3.69

2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 (Ex)

Trends in NHAI Debt, INR tnEPC

HAM

BOT

2017-18

2018-19

2019-20

(Inside to Outside)

Source: CARE Research

Asset Monetization – Key for fueling growth

NHAI to be the flag-bearer of the

government’s asset monetization programme

InvITs and TOTs to be preferred

monetization routes

• INR 1.6tn to be raised through the recently

announced National Monetization Plan (NMP)

over FY2022 to FY2025.

• Under NMP aggregate length considered for

Asset monetization is 26,700 km – Approximately

22% of the total national highways.

• NHAI has already raised Rs. 170 billion

through the TOT mode.

• NHAI is set to launch its maiden InvIT worth

Rs, 51 billion in 2021.

300 329440

5345,000 5,476

7,3308,894

0

100

200

300

400

500

600

0

2,000

4,000

6,000

8,000

10,000

FY2022 FY2023 FY2024 FY2025

Phasing under NMP

Monetization Value, INR bn (RHA) Length of Assets Monetized, Kms

Toll – Operate – Transfer (TOTs)

TOT Bundles Stretches Kms Amount Raised (INR bn) Year

TOT Bundle 1 9 682 97 2018

TOT Bundle 2 8 586 No takers 2018

TOT Bundle 3 9 566 50 2019

TOT Bundle 4 7 401 No takers 2019

TOT Bundle 5 2 160 22 2020

Total 35 2395 ~170

Source: National Monetization Pipeline, CARE Research

Steep uptick in private participation is vital

Private Sector Expenditure

continues to be weak

39% - expected share of private sector

Expenditure in NIP

489

832

9521,041

871

155 164216 219

108

2016-17 2017-18 2018-19 2019-20 2020-21 (upto Jan21)

Expenditure by NHAI, INR bn Expenditure by Private Sector, INR bn

24%

17%

19%17%

12%

Source: CARE Research

25%

36%

39%

Centre

State

Private

Evolution of regulatory framework to encourage private participation:• Changes in Model Concession Agreement (MCA) of BOT (Toll)

Project• Changes in MCA of TOT framework• Changes in MCA of HAM model• Greater transparency in operations

Return of participation in BOT mode

remains to be seen

RENEWABLE

ENERGY

Renewable to Lead Growth in Power Installations Through 2025 (NIP)

Current Snapshot Vision 2025

Hydro, 12%

Renewable, 25%

Thermal, 62%

Nuclear, 2%

Generation Category wise Installed Capacities (GW)-March'21

Hydro, 9%

Renewable, 39%

Thermal, 50%

Nuclear, 2%

Generation Category wise Installed Capacities (GW)-March'25

Requires Capital

Expenditure of ~USD 120

Billion / Rs. 8,730 Billion

Addition of

~171 GWSOLAR – 109 GW

WIND – 58 GW

OTHERS – 4 GW

94 GW 265 GW

Source: Central Electricity Authority, National Infrastructure Pipeline - Report of Task Force

*The original capital

expenditure for

renewables under NIP is

estimated at INR 9,295

billion. The revised capital

expenditure of INR 8,730

billion is capex estimated

from FY22 onwards

India’s Renewable Capacities More Than Doubled In Last 5 Years

All India RE Installed Capacity (GW)- Mar’2021 Driven by ……

2732 34 36 38 39

7

12

22

28

3540

8

8

9

9

10

10

4

4

4

5

5

5

0

10

20

30

40

50

60

70

80

90

100

Mar, 2016 Mar,2017 Mar, 2018 Mar,2019 Mar,2020 Mar,2021

Wind Solar Bio Small Hydro

Government Initiatives

▪ National Solar- Wind Hybrid Policy

▪ National Solar Mission

▪ Offshore Wind Policy

▪ Green Energy Corridor

Tariff Competitiveness

3.3 2.42.4 2.4 2.0

5.85.4

2.8 2.8 3.03.2 3.3 3.43.9

3.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2016-17 2017-18 2018-19 2019-20 2020-21

Trend in Tariffs (Rs./kWh)

Solar Power Wind Power Thermal PowerNote: RE - RenewableSource: Central Electricity Authority

46

56

69

78

88

98

Counterparty Risk is one of the biggest challenges for renewable generators

Discoms continue to be the weakest link, and payment delays by discoms continue to be

on an increasing trend for renewable generators

6.1 18.2

55.2

90.3

118.2

1.3

2.7

9.7

10.7

16.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

Apr'17 Mar'18 Mar'19 Mar'20 Mar'21

Overdue Position to Discoms for REs (INR bn) & Monthly Billing Amount to Discoms for REs (INR bn)

Overdue Amount (RE) Amount Billed to discom (RE)

91%

9%

Conventional Renewable

51%34%

15%

CPSEs IPPs REs

Electricity Generation (BU), March'21

Summary of Overdue Amount, March'21

Note: CPSEs – Central Public Sector Enterprises, IPPs – Independent Power Producers, REs –Renewable GeneratorsSource: PRAAPTI

Financing of the Growth in Renewable Generation

Total Capital Requirement - ~ INR 8,730bn / USD 120bn

Debt ~ 70% i.e. INR 6,111bn (USD 84bn) Equity ~ 30% i.e. INR 2,619bn (USD 36bn)

• Tapping capital markets (both international &

domestic) through issuances of

• Green Bonds, Sustainable Bonds

• Innovative obligor/ co-obligor structure

which benefit from diversified

geography, counterparty and tariff with

structural features and protection

• Tapping long term institutional / endowment

and pension funds for equity financing (both

international and domestic)

• Ongoing asset recycling / monetization

including sale of stakes operation portfolios to

fund growth

3168

647

3014

450

35254312

913

4005

2330

4958

0

2000

4000

6000

2017 2018 2019 2020 2021 YTM

Bond Issuance Proceeds (USD million)

Green Bonds All Sustainable Bonds

784

1204

1446 1393

600

800

1000

1200

1400

1600

2017 2018 2019 2020

Foreign Direct Investments, in USD mn

High international investor interest - driven by ‘Green’ credentials / ESG readiness of the renewable sector

Source: ForbesIndia.com, Action Plan by Standing Committee on Energy (2020-21), MNRE

Other Measures that are critical to Achieve the Vision 2025 under NIP

1. Discoms –

➢ Sustainable improvement in balance sheet and fiscal position of utilities

➢ ‘Must Run’ Status for Renewable Generation

2. Boosting of Solar PV modules manufacturing in India

3. Regulatory Certainity

➢ Sanctity of PPA Contracts

➢ Unilateral Bid / Tender Cancelations

Operational Initiatives

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