Rajkiran Rai emphasizes the need for increased private investment to meet India's infrastructure demands of Rs 770 lakh crore over the next two decades.
New Delhi, India Jul 13, 2026 ALN: India's infrastructure development is at a critical juncture, requiring nearly Rs 770 lakh crore in investments over the next 20 years. Rajkiran Rai, the managing director and chief executive of the National Bank for Financing Infrastructure and Development (NaBFID), has highlighted that this monumental financial requirement cannot be met solely through government budgetary resources. Instead, he advocates for a significant increase in private capital participation.
In an interview, Rai discussed the evolving landscape of infrastructure financing in India. He noted that the private sector is increasingly participating in projects where concession agreements are clearly defined. Sectors such as renewable energy and road construction are currently attracting substantial private investment. Recently, NaBFID financed two major road projects—the Guwahati Ring Road and the Agra-Gwalior highway, each valued at over Rs 5,000 crore, showcasing a strong appetite from investors.
This shift towards private investment is significant as it reflects a broader trend in infrastructure financing worldwide. Governments are often constrained by budget deficits and public debt, making it imperative to seek alternative funding sources. The participation of private capital not only alleviates the financial burden on the government but also introduces efficiency and innovation that can enhance project delivery. The increasing involvement of private players in infrastructure projects can also lead to improved service delivery and maintenance, as these entities have a vested interest in the long-term success of the projects.
Rai pointed out that urban infrastructure presents the largest opportunity within the overall investment requirement. Out of the Rs 770 lakh crore needed, approximately Rs 370 lakh crore is earmarked for urban infrastructure alone. However, many urban local bodies currently lack the capacity to finance and execute projects of this scale. To address this, NaBFID is implementing a transaction advisory platform and supporting municipal bond issuances to enhance the financial capacity of municipalities.
The rapid urbanization in India, with millions migrating to cities each year, has created an urgent need for robust urban infrastructure. This includes not only transportation networks but also water supply, sanitation, waste management, and housing. The challenge lies in developing a sustainable urban infrastructure that can accommodate growing populations while minimizing environmental impact. By facilitating access to private capital, NaBFID aims to empower local bodies to undertake projects that can significantly improve urban living conditions.
Despite the opportunities, Rai acknowledged several challenges in the infrastructure financing sector. One of the most significant hurdles is the quality of detailed project reports (DPRs). Inadequate DPRs can lead to delays during project execution, which under the Reserve Bank of India (RBI) norms, can escalate into credit events, increasing capital requirements. Additionally, land acquisition remains a major obstacle, particularly in the energy sector where efficient transmission infrastructure is crucial.
The issue of land acquisition is particularly contentious in India, where land is often held by multiple stakeholders, and securing it for public projects can lead to disputes and delays. Moreover, the process can be slow and bureaucratic, further hindering timely project execution. Rai’s emphasis on the need for improved DPRs highlights the importance of thorough planning and feasibility studies in ensuring that projects are not only financially viable but also socially acceptable and environmentally sustainable.
Rai emphasized the necessity for a larger pool of companies capable of executing large-scale projects. He compared the order books of major players like L&T, which has an order book of about Rs 5 lakh crore, to smaller firms that only manage Rs 30,000 crore to Rs 40,000 crore. This disparity highlights the need for more companies with the scale and capability to handle significant infrastructure projects.
The concentration of project execution in a few large firms can lead to inefficiencies and a lack of competition, which can drive up costs and extend project timelines. Encouraging the growth of mid-sized and smaller firms through policy support and access to financing can help create a more competitive environment. This diversification of the project execution landscape is vital for fostering innovation and enhancing the overall quality of infrastructure development in India.
NaBFID has built an impressive portfolio of approximately Rs 1.15 lakh crore in a short period. Rai explained that their sanctioned book currently stands at about Rs 3.5 lakh crore, with disbursements occurring over time. They anticipate that around 70-75% of the sanctioned amounts will eventually translate into outstanding assets. The bank aims to maintain a balanced mix of greenfield and brownfield projects, with greenfield projects currently accounting for about 42% of the portfolio.
This balanced approach is crucial for sustainable infrastructure development. Greenfield projects, which involve the construction of new facilities, can stimulate growth and create jobs, while brownfield projects focus on the renovation and upgrading of existing infrastructure, often leading to more efficient resource utilization. By strategically investing in both types of projects, NaBFID can contribute to a comprehensive development strategy that addresses the diverse needs of India's infrastructure landscape.
Looking ahead, NaBFID plans to scale its outstanding book to between Rs 4.5 lakh crore and Rs 5 lakh crore with its current capital base. Rai also mentioned plans to strengthen capital through retained earnings and aims to raise at least Rs 7,500 crore of AT1 capital over the next few years, including around Rs 1,000 crore from the domestic market this year, contingent on market conditions.
The ability to raise additional capital is essential for NaBFID to continue its mission of financing infrastructure development in India. As the demand for infrastructure investment grows, the bank's capacity to mobilize resources will play a critical role in meeting the country's ambitious infrastructure goals. Moreover, attracting investment from both domestic and international sources will be vital in ensuring a steady flow of funds into the sector.
In conclusion, the role of private capital in India's infrastructure development is becoming increasingly vital. As the country seeks to meet its ambitious infrastructure goals, collaboration between public and private sectors will be essential for success. By fostering an environment that encourages private investment, enhancing the capacity of local bodies, and addressing the challenges in project execution, India can pave the way for a robust infrastructure framework that supports sustainable growth and improves the quality of life for its citizens.
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