1. Infrastructure finance Breaking the deadlock Infrastructure finance Breaking the deadlock

2. 1 India will require ~ Rs100 trillion of infrastructure investment over the next decade Rs Trillion Total2017-20 (projected) 2012-17 (Estimated - XIIth Plan)2012-17 (Estimated - XIIth Plan)2012-17 (Estimated - XIIth Plan)2010-12 (part of XIth Plan)2010-12 (part of XIth Plan)2010-12 (part of XIth Plan)2010-12 (part of XIth Plan)2010-12 (part of XIth Plan)2010-12 (part of XIth Plan) Source: Planning Commission, BCG analysis Investments required in infrastructure in India

3. 2 Private participation in Indian infrastructure has been growing to reach Rs1.5 Tn/ annum Source: World Bank PPIAF database, Planning Commission Rs Trillion 1.5 1.0 0.0 0.5 Private sector investment in infrastructure

4. 3 5X growth required in private participation over next decade $ trillion 60 24.0 2012-17 0 22.5 20 45.0 40 2017-20 Private 2007-12 44.0 21.5 Public 16.4 1.4 5.2 2003-07 9.3 7.9 20.0 22.5 15% % Private 24%45%50% Source: Planning Commission, BCG analysis Split of infrastructure investment by public and private 0.2 Private investment annum (RsTn) 147.5

5. 4 Banking credit to infrastructure has grown at a rapid pace to reach >10% of loan book % loan book Infrastructure loans as % of total loans for banks 5.0 Source: RBI, BCG analysis

6. 5 Banks will hit their limit of long term lending with only infrastructure and mortgages Note: 50–60% of CASA deposit assumed to be long term. Implies 23–28x of advances on average. (F) = Forecast. Sources: Bank annual report; BCG analysis. By 2020, Rs 45 tn of infrastructure debt will be outstanding Infrastructure and mortgages will account for 27 % of bank advances Rs Trillion 2020 (F) 45.0 22.5 2015 20.0 10.0 2010 6.0 Bank finance Other resources % 2020 (F) 27 15 2010 20 11 2000 5 Mortgage loan Infrastructure loan 7.5X

7. 6 Challenges well known Long term funding Not enough participation from domestic and foreign institutional investors who can bring in long term money Concentration risk Large projects tend to get concentrated to a few large financers Execution challenges Project overruns a norm Complex project risks Each sector has several unique risks PPP structures evolving Long term funding Not enough participation from domestic and foreign institutional investors who can bring in long term money Concentration risk Large projects tend to get concentrated to a few large financers Execution challenges Project overruns a norm Complex project risks Each sector has several unique risks PPP structures evolving

8. 7 Collective effort required to overcome challenges Government Regulators Banks NBFCs/ I Banks End to end orchestration role Deepen wholesale debt markets Enable greater debt & equity flows from different domestic and foreign sources Ensure financial stability Primary source of infrastructure financing Bring specialized skills for risk assessment, project structuring and capital raising

9. 8 Key issues/ questions that need to be resolved Creating greater visibility/ predictability of infrastructure projects Reducing project execution delays Optimal structure for private participation Deeping non banking debt market Better appreciation and mitigation of risks involved Enabling larger capital market flows into infrastructure Creating greater visibility/ predictability of infrastructure projects Reducing project execution delays Optimal structure for private participation Deeping non banking debt market Better appreciation and mitigation of risks involved Enabling larger capital market flows into infrastructure