How will India's infrastructure be strengthened now?

The trading session of monday, august 5, 2024 is proving to be Black monday not only for india but for the stock markets of the whole world. The reason is the strength in the Japanese currency Yen and the threat of recession looming over the US economy. There has been a ruckus in the Japanese stock exchange Nikkei 225 index for the last two sessions. In Monday's session, the Nikkei 225 index has fallen by about 13 percent to 4750 points.

Due to the strength in the Yen, there has been a tsunami in the indian stock market index BSE Sensex and NSE Nifty. The prices of midcap and smallcap stocks are falling like a pack of cards. But this crisis is not going to end here. The effect of the strength of the Yen can be seen on a large scale on the indian economy because these projects, which are being built with Japanese funding to strengthen India's infrastructure, including railways, metros and bullet train projects, can create a lot of trouble for these projects.

Strength in Japanese Yen increases trouble

On one hand, central banks around the world are exploring the possibility of interest rate cuts. Last week, in contrast, the bank of japan surprised everyone by raising interest rates from 0 - 0.1 percent to 0.25 percent. This is the highest level of interest rates in japan in the last 15 years. Due to this decision of the bank of japan, the Japanese Yen is being seen strengthening. Due to Japan's decision to increase interest rates, investors in stock markets around the world are seen ready to sell.

Possible impact on India's infrastructure projects

This decision of japan can have an impact on infrastructure projects in india and the companies building them. india has been getting the big benefit of zero percent interest rate in Japan. Loans have been available at very cheap rates to develop infrastructure projects in India. indian companies have also been raising capital in japan due to cheap loans. Apart from laying a network of roads and highways in the country and bullet-metro projects, power companies have benefited from this. In 2017, the indian government had signed an agreement to provide 81 percent of the funds for the Ahmedabad-Mumbai bullet train project for 50 years at an interest rate of 0.1 percent. But after the bank of japan made the loan expensive, private companies developing infrastructure for Japanese loans may have to pay interest on the loan.