NEW DELHI: Key infrastructure sectors including renewable energy and roads and real estate are expected to see an investment growth of approximately 38 per cent in fiscals 2025 and 2026, in comparison to previous two fiscals to Rs 15 lakh crore, stated a report by CRISIL Ratings. The surge, per the report, will be aided by India’s need for creation of sustainable infrastructure by adding more green power to the energy mix, improving physical connectivity through a denser road network, as well as rising demand for residential and commercial real estate.
“The underlying demand drivers in these three sectors remain strong, with regular policy interventions fuelling investor interest. This has also supported healthy credit risk profiles of private players and strengthened their execution and funding capabilities,” said Krishnan Sitaraman, Senior Director and Chief Ratings Officer, CRISIL Ratings.
For renewables, the key growth driver is demand for sustainable energy transition. The government target is driving up auctions, which has created a strong pipeline. India saw auctions of 35 GW in fiscal 2024 which is the highest ever in a single fiscal. This resulted in a strong pipeline of 75 GW. This will primarily drive implementation of 50 GW capacity over the next two fiscals.
In the roads sector, CRISIL Ratings stated, the need for improved physical connectivity, which helps in efficiency gains for the economy, has driven healthy awarding over the past few fiscals, barring the last one. Per the report, strengthened order books of road developers, at around 2.5 times of revenue, will support approximately 11 per cent growth in highway construction, which is seen at around 12,500 km per year over the next two fiscals.
And for real estate, net leasing of commercial office space will see a growth in demand by 8-10 per cent this fiscal and the next. The primary drivers of the same will be global capability centres eyeing India’s large talent pool and competitive rentals, as well as healthy demand from domestic sectors. According to CRISIL, demand growth for residential real estate will sustain at 8-12 per cent this fiscal and the next, aided by favourable affordability and premiumisation.
“Regular policy interventions in these sectors have also increased investor interest, thus providing opportunities to developers to unlock equity capital. Cumulatively ~Rs 2 lakh crore of equity capital has been deployed in these sectors over the past two fiscals driven by strong investor participation. A key enabler here has been the emergence of vehicles such as infrastructure investment trusts (InvITs) and real estate investment trusts (REITs). The capital inflows from investors have helped improve credit profiles of private players, thus strengthening their ability to fund future growth,” said Manish Gupta, Senior Director and Deputy Chief Ratings Officer.
Source: The Financial Express
