Capital Dreams

Maharashtra has become the first Indian state to set up an Infrastructure Investment Trust (InvIT) of its own. Dubbed ‘MahaInvIT, the initiative will transfer selected assets from the Public Works Department, the Maharashtra State Road Development Corporation and the Maharashtra Infrastructure Corporation into a new financial structure. The goal is bold: to unlock future revenues today and use them to fund new infrastructure such as roads and bridges.

In theory, the move makes sense. The state is adopting a model successfully used elsewhere. Infrastructure Investment Trusts, pioneered in the United States in 1960, offer a way to securitise infrastructure income and attract both private and public investors. India’s National Highways Authority (NHAI) embraced the idea in 2020, raising funds through its own National Highway InvIT. Maharashtra’s version mirrors that template.

It is meant to act as a bridge between the state’s infrastructure ambitions and its capital constraints. The state is no stranger to fiscal pressure, and the MahaInvIT could serve as a clever workaround: instead of burdening the exchequer with more borrowing, it turns predictable revenue streams from existing public assets into an investable product.

However, for all its innovation, the trust’s success will depend less on structure and more on execution. India has long suffered from the malaise of announcement-heavy, delivery-light governance. Grand plans stumble over bureaucratic inertia, delayed clearances and capacity constraints. Consider the NHAI InvIT itself. While it did manage to raise over Rs. 5,000 crore initially, questions persist about project quality, investor appetite and the time taken to bring assets on stream. Similar bottlenecks await MahaInvIT if the state does not ensure efficient execution and transparent governance.

InvITs are not magic wands. They require steady, reliable income from underlying assets, not something every public infrastructure project in India can guarantee. Revenue models for many roads and bridges depend on toll collections or annuity payments which can be susceptible to political interference or poor compliance. If investor returns fall short of expectations, confidence in the model could erode quickly.

Then there is the question of accountability. What happens if the trust fails to attract sufficient investment? Or if the projects it funds underperform? The governance framework must not only comply with SEBI norms but also go beyond them, ensuring transparency, performance benchmarks and independent audits. Maharashtra’s record on this front is mixed.

Still, the state deserves credit for stepping ahead of the curve. As India embarks on its next wave of urbanisation and infrastructure expansion, states will need to think creatively about financing. That, ultimately, is the question. Ambition is not in short supply. But will there be ground results? Without swift project clearances, robust governance and investor confidence, the trust merely remains a gesture of financial engineering rather than a catalyst for bulldozers and backhoes.