Davos 2026: States need equitable risk sharing, new-age financing for investments
Speaking at a panel discussion on new-age finance- building infrastructure and mobilizing capital for sustainable regional growth at ET House in Davos, Jharkhand’s finance secretary Prashant Kumar said his state has started looking at new-age finance through blended finance and public-private partnerships to finance capital infrastructure.
Central and state governments traditionally finance infrastructure projects through budget grants or bank loans.
Kumar stated that Jharkhand is now choosing projects that can attract the appetite of the private sector, adding that the fiscal space is limited but the state needs a lot of development.
“We are bringing in the right policy frameworks, and regulatory mechanisms,” he said, adding steps are being taken to facilitate land transfers that are a challenge for all such large projects.
Speaking at the panel, PwC India Capital Projects and Infrastructure Development partner and leader Mohammad Athar stated that the private sector is willing to invest subject to certain conditions. “Private sector capital spending and infrastructure creation have happened where there is demand and policy assurance,” he said.
According to Athar, the land policy framework is an important element in ensuring private capital expenditure. He said the government could offer land parcels on annual fixed rental patterns to encourage investments. Saurabh Tripathi, global leader in BCG’s financial institutions practice, said a stable regime was crucial, adding that he “can never overstate the importance of this.”
Infrastructure always has a lot of policy risk associated with it, he noted, adding certainties around land acquisition, taxation, and government policies over the planning horizon investors can bring the money.
“The important thing is to create a stable environment so that foreign money flows can come,” Tripathi said.
Foreign private capital will need a way to de-risk in emerging market conditions, he said. “They want to take some risk on returns, but some of the existential risks that come from infrastructure projects can completely scare investors away,” he said.
Kumar said Jharkhand has now framed contracts where certain risks are with the state government. “Operational risk is borne by the private sector,” he said, citing the solar energy industry in the state, where land and water are given free of charge. “We also give you a 25-year purchase warranty. So when you cover that kind of risk, things fall into place,” he said.
Kumar said Jharkhand is actively working to attract investments in healthcare as well as other sectors.
The new policy on industrial parks is almost ready and will be published in the next two to three months. The state finance minister also stated that investments in transportation and logistics centers will also come.
According to Tripathi, these frameworks need to be supported by social assistance. “We want states to be out there with a very proactive marketing approach,” he said, adding that they should proactively seek out the right investors for them.
“When we create the right environment, it doesn’t mean people will come. We need to go out and market,” Tripathi said.
“It’s very important to go out and market and let the right kind of investors know that you’re here, you’re ready to do business.”
