Sustainability is a mix of Social sustainability, Economic Sustainability and Environmental Sustainability
Social Sustainability is achieved by providing infrastructure services to the socially deprived sections. Viability Gap funding (VGF) which enables funding for projects which would not be economically feasible is a way ahead to achieve social sustainability. VGF is funded through money earned by Government from commercially viable projects through Negative funding. In Germany, a certain percentage of work in a project should be handled by socially deprived sections of the population. This kind of work allocation in India will develop the socially weak sections of Indian society.
Economic Sustainability is possible by New Public Management (NPM) principle of PPP where the private parties are encouraged to finance Infrastructure relieving the Government of fiscal deficit. An alternative funding source, Foreign Direct Investment (FDI) is subject to political and financial risks and FDI players are averse to invest in India. In such cases, developing the domestic finance market is the way to sustainable financing. Real Estate Investment Trusts (REITs) incentives and Infrastructure Investment Trust (INVIT) proposed in budget 2014 are welcome moves towards achieving sustainable funding in India.
Environmental sustainability can be achieved when banks adopt Equator Principles. A move in this direction was initiated by Infrastructure Development Finance Company (IDFC) in 2013 when it adopted the equator principle. IDFC is India’s leading finance player and the first to adopt Equator Principles. However, sustainable funding can be ensured only when all banks adopt them. Also, there should be banks which exclusively finance sustainable projects to speed up sustainable constructions in India. UK’s Green Investment Bank (GIB) lend to investors who work on renewable energy projects. Another way to go ahead is tie up with foreign institutions to learn from them. In 2014, India and German KfW Development bank signed loan agreements for sustainable development of Tamil Nadu towns.
1. "IDFC" Sustainable Infrastructure Development and Environment Management. Web. 7 Nov. 2014. <http://www.idfc.com/our-firm/environment_management.htm>.
2. The Greening of Infrastructure Finance, Insight magazine, Issue No. 2, Spring 2012
3. German Embassy, New Delhi, 2014, “Germany India sign agreement for sustainable infrastructure development” <http://www.india.diplo.de/Vertretung/indien/en/__pr/Business__News/Kfw__2014.html>