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Roads and telecom are missing out on infrastructure credit revival

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Roads and telecom are missing out on infrastructure credit revival

The subdued growth in road credit comes against the backdrop of substantial government spending on highway development. However, the sector's financing structure has changed over the years, with a growing reliance on budgetary allocations and asset monetisation alongside private investment.

Infrastructure credit grew 11.8% in September, led by 22.9% growth in power lending, while road credit rose just 0.7% and telecom credit contracted 13.4%. Non-food bank credit expanded 19.1% year on year, while industrial credit grew 19.5%, indicating a broader acceleration in lending. Budgetary support accounted for 75% of national highway financing in FY24, with private investment and asset monetisation contributing 15% and 10%, respectively. Medium industry credit grew 33.2% in September, outpacing growth of 24.4% in micro and small industries and 16% in large industries.

Bank credit to the infrastructure sector grew 11.8% year on year in September, but the expansion was uneven, with lending to roads rising just 0.7% and telecommunications contracting 13.4%, even as credit to the power sector increased 22.9%, according to Reserve Bank of India data. The divergence comes amid an acceleration in overall bank lending. Non-food bank credit grew 19.1% in September, compared with 11.2% a year earlier, while industrial credit expanded 19.5% against 7.7% in the corresponding period last year. Infrastructure lending, however, remained uneven, with power accounting for the strongest growth among its major segments. Advt

The subdued growth in road credit comes against the backdrop of substantial government spending on highway development. However, the sector's financing structure has changed over the years, with a growing reliance on budgetary allocations and asset monetisation alongside private investment.


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