Thread by @sway_hi

A brilliant speech by a stellar minister detailing the innovative ways being adopted by his ministry. Some of which I will explain in detail:
via @YouTube

In his speech @nitin_gadkari sir has mentioned the innovative ways in which his ministry is raising funds for infrastructure development:
During the UPA years the BOT (build, operate, transfer) method was in use where the private took over the project completely for a 15 year...

And at the end of the 15 year period they transferred the road asset back to the govt. This model meant that the risk of land acquisition and fluctuating toll collections were the headache of the private contractor. Predictably this model caused widespread bankruptcy..

Of the private parties because of land acquisition nightmare unleashed by the then UPA govt. This then obviously led to hike up in NPA of the lender who lent money for such read construction to the contractor.

Under the current govt and notably @nitin_gadkari ji this BOT model has given way to the Hybrid Annuity Model. Where the initial 40% of the capital expenditure is done by the govt. which includes cost of land acquisition.

The balance 60% of the cost is borne by the private party who in turn raises 70% of this 60% in debt form from money lenders. In return the govt takes of care of the toll collections. And the toll collections in turn are used to generate a steady stream of annuity payments

To the lender and the private party concerned. This HAM model is having substantial success rate currently given the fact that the land acquisition risk and the toll collection risk has been totally taken over by the govt.

In addition to this the ministry has decided to raise funds overseas thought the Masala Bond route.
A Masala Bond is an India currency denominated bond floated overseas. The notable points about the Masala Bonds are: a) the currency risk is borne by the bond holder..

b) the yield (return) of the bond will fluctuate depending on the appreciation/depreciation of rupee against the dollar thereby compensating the bond holder.
This ways the Masala Bond is able raise foreign funds without putting pressure on our foreign exchange reserves...

Besides the Masala Bond and the Hybrid Annuity Model, his ministry is also securitizing, monetizing infrastructure assets. Namely: A group of projects, say highways, with independent tollways are bundled together, and money is raised to fund the construction of these...

That money raised is repaid back to the investor through systematic interests funded by the toll collections.
The ministry is working on making this an investment vehicle, that is available to common Indians. This will be an instrument like say a KVP which will...

Give returns upwards of 8% to the average Joe on the road.
This securitized bundle of infrastructure projects will also be open to investing into by pension funds etc. The toll revenue in this case too will be used to pay coupon against the bond issued..

These are three most notable funding vehicles being used by @nitin_gadkari ji to fund infrastructure development, not just roadways, across the country, specially since the planned outlay of funds in the budget are woefully inadequate to meet our infrastructure needs....

The speech also talks about the various new modes of transport that will be coming up across the country in the next few years: from Green Expressways to Cable cars in cities, to an EV revolution in the works.
Imo his speech is cute for the constant pessimism of SM!

*parties, *cure