New Development Financial Institution could provide huge thrust to India’s infrastructural development and its role in driving economic growth. Discuss (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 4 years
KEY POINTS
· In the initial years of the country’s development after Independence, DFIs played an important role, but the system got subsumed into the universalisation of banks.
· India’s annual tax losses due to corporate tax abuse are estimated at over $10 billion, according to the Tax Justice Network report.
· India would continue to require massive investment in infrastructure (roads, railways, ports, airports, rural connectivity, building mandis with state-of-the-art logistics, and so on).
· Banks alone would not cater to critical sectors’ financing needs, and multipronged channels have to be tapped involving both public and private sectors.
· The first DFI, or the NBFID as it is called, will have borrowing options from the government, RBI, banks, mutual funds, and multilateral institutions like the World Bank and the Asian Development Bank.
· Given these options for raising resources, the NBFID should kick-start soon with a focus on making the best business out of infrastructure, which is the economy’s critical need.
· Companies under stressed balance sheets would divest some assets bought by those willing to dive into opportunities in the brownfield. The good thing about the NBFID mandate is its scope into the brownfield as well.
· The success of the first DFI in the new format would pave the way for similar future entities. Returns in India would be far better than in the developed world.
