The government has identified debt taken by Indian Railways for some projects, which are currently being reconsidered for refinancing by Indian Railway Finance Corporation (IRFC), one of the officials said.
IRFC is expected to refinance up to ₹20,000 crore worth of loans of Indian Railways’ special purpose vehicles in Odisha, Andhra Pradesh, Bihar, and Chhattisgarh this fiscal year. These projects have debts ranging from ₹4,000 crore to ₹6,000 crore each, a second official said, adding loans to metro projects and associated transport infrastructure could also be considered for refinancing.
Government-owned infrastructure financing institutions can borrow domestically at competitive rates without the risks and obligations associated with raising debt from multilateral agencies, the second official said, underlining that interest on some dollar-denominated multilateral loans has touched 8-9%.
“Servicing outstanding dollar-denominated loans is getting expensive in light of the rupee softening,” a third official said.
The rupee depreciated nearly 4% against the dollar between last November and this February. It has since rebounded around 1.5%.
Besides higher costs, loans offered by some multilateral agencies have various conditions such as restrictive global bidding.
“Private players tend to inflate costs when global bidding is restricted under loan terms,” the official said. “The higher interest payout is projected due to depreciation in the rupee value…Infrastructure players want borrowing to remain at State Bank of India‘s Marginal Cost of Funds-based Lending Rate (MCLR) of around 8%,” the official said, adding some projects that got funding from country-owned institutions are particularly under examination.
According to official estimates, India’s outstanding multi-lateral debt stood at around $ 79.5 billion as on December 2024.
(With inputs from Banikinkar Pattanayak)
Content Source: economictimes.indiatimes.com