Investments in India's key infrastructure sectors, mainly renewable energy, roads, and real estate, are likely to grow by 38% in fiscals 2025 and 2026, according to Crisil Ratings.
The ratings agency expects investments to rise to Rs 15 lakh crore. Several factors, including India's need for the creation of sustainable infrastructure, would drive the growth in investments, Crisil ratings said in a note on June 18.
Key Growth Drivers
“The underlying demand drivers in these three sectors remain strong," said Krishnan Sitaraman, senior director and chief ratings officer at Crisil Ratings.
India's need for creating sustainable infrastructure would be met by:
Adding more green power to the energy mix.
Improving physical connectivity via denser road networks.
Rising demand for residential and commercial real estate.
Renewables Sectors
Crisil stated that demand for a sustainable energy transition is the key growth driver in the renewable energy sector.
The government target to have 450 gigawatts of installed renewable capacity by 2030 has driven up auctions, creating a strong pipeline for capacity additions.
The rating agency noted that India saw auctions of 35 gigawatts in fiscal 2024, which was the largest in a single fiscal. This has created a pipeline of 75 gigawatts. This pipeline would drive the implementation of 50 gigawatts capacity in renewables over the next two fiscals.
Roads Sector
Better physical connectivity helps an economy be more efficient. This need has driven healthy order awarding over the past few fiscals, expecte for fiscal 2024, said Crisil Ratings.
The order books of road developers are strong, accounting for 2.5 times their revenue. This will help support an 11% growth in highway construction. This translates to 12,500 km of construction per year over the next two fiscals.
Real Estate
Crisil Ratings noted supportive policy interventions for the residential real estate market. The implementation of the Real Estate (Regulation and Development) Act, 2016, has not only improved transparency but also timely project completion.
Furthermore, the recent amendments to the Special Economic Zones (SEZ) Act, which allowed floor-wise demarcation of SEZ areas into non-SEZ areas, should aid faster growth in the commercial real estate space by attracting a wider base of tenants.
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