Finance Minister Nirmala Sitharaman Advocates Innovative Financing For Sustainable City Infrastructure
New Delhi, 17th June 2023: Finance Minister Nirmala Sitharaman emphasized the importance of adopting innovative strategies to attract private investment, bridge financing gaps, and promote sustainable infrastructure development in cities. Speaking at the ‘G20 Infrastructure Investment Dialogue,’ she acknowledged the growing challenges in financing infrastructure, especially due to monetary policy tightening in key markets, leading to higher interest rates and increasing debt repayment burdens.
Given this backdrop, Sitharaman asserted that innovative financing and funding mechanisms for cities could play a crucial role in filling the funding gaps. Such methods could complement public investment and financing from Multilateral Development Banks (MDBs). She stressed the need for alternative solutions to encourage private sector participation, highlighting various innovative financing instruments like blended finance, structured project finance, securitization, thematic bonds, biodiversity offerings, and local currency finance.
The Finance Minister advocated for the establishment of a supportive ecosystem that bolsters the creditworthiness of urban local bodies. This would be achieved through well-crafted policy measures and effective regulatory frameworks. She emphasized that investment decisions in infrastructure will significantly impact the future of cities and the quality of life for future generations.
Opening the dialogue, Sitharaman stressed recognizing infrastructure’s potential to deliver public good and enable shared prosperity, aligning with the core value of India’s G20 Presidency – ‘Vasudhaiva Kutumbakam.’
The rapid urbanization of the world presents a significant challenge for cities. Currently, 55% of the global population resides in urban areas, and this is expected to increase to 68% by 2050, necessitating substantial investments in infrastructure to accommodate this growth.
Sitharaman drew attention to the GIFT International Financial Services Centre (IFSC), a specially designated international financial jurisdiction with robust business regulations and a competitive tax framework, aimed at fostering promotion and growth ease of doing business. She informed the audience that GIFT IFSC boasts over 400 registered entities across various business segments, including banks, capital markets, insurance, fintech, aircraft leasing, and bullion exchange, and continues to experience robust growth with active participation from both international and domestic financial institutions.
