Infrastructure Bottlenecks

Ask any well meaning expert the biggest problem that India faces towards its journey to higher growth. 9 times out of 10, they are likely to use the word infrastructure. Indeed, it is the sorry state of the infrastructure in the country that is not allowing us to become more productive. However, it has recently come to light that infrastructure is affecting country's growth prospects in an indirect manner too. In fact, the damage here could be as large as its direct repercussions on the economy. LiveMint reports how NPA crises that most PSU banks in India face are a result of the collapse of the infrastructure boom of the past decade. 

Clearly, no other sector has hurt the finances of the banking industry as much as the bad loans from the infra space. Agreed that on account of delays, a lot of infra projects find themselves with no revenue generation options. However, there is too much concentration of loans among just a few large firms. Besides, the banks most affected have mostly been PSU banks. This raises doubts about the existence of under hand deals and palm greasing in disbursing infra loans. Having said that, the importance of infrastructure development cannot be emphasised enough. And therefore, an effective lending mechanism for the sector will have to be given a serious thought. However, any mechanism will not be able to stay profitable unless Government eases up bottle necks to infra development.