Infrastructure investment trusts are steadily making inroads into the Indian financial markets as an instrument of choice for power sector infrastructure. Discuss (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· Availability of cheap long-term finance is among the most critical prerequisites given the capital-intensive nature of renewable energy technologies which require the majority of costs to be front loaded.
· InvITs are pooled investment vehicles which enable direct investment of capital from investors in primarily operational infrastructure projects.
· In a similar move, the Reserve Bank of India in November 2021 amended foreign exchange regulations allowing foreign portfolio investors (FPIs) to invest in InvIT debt securities.
· This is in addition to the already established rules by the Pension Fund Regulatory and Development Authority (PFRDA) which allow private sector (tier 1) NPS subscribers to invest in units issued by InvITs.
· InvITs are steadily making inroads into the Indian financial markets as an instrument of choice for power sector infrastructure owners to monetise their assets and for investors to gain exposure to the sector. A comparison here with its developed world counterpart, yieldcos, can provide valuable lessons.
· In an Indian context, InvIT norms are more stringent compared to yieldcos with leverage restrictions in place, but investor expectations regarding risk-return dynamics need to be moderated so that a similar situation does not occur in India.
K. V. A 3 years
Kindly review
IAS Parliament 3 years
Good attempt. Keep Writing.
Rekha 3 years
Kindly review sir/ mam
IAS Parliament 3 years
Good attempt. Keep Writing.
