India wants to spend over two lakh crore rupees in the next year alone on infrastructure. Private sector companies need bank guarantees because if they don't have anybody backstopping the deal, the government may have to swoop in and clean up the mess. But banks aren't too enthusiastic about taking on these infra guarantees as loans turn into duds.
In today’s episode for 15th December 2022, we offer an oversimplified explanation of surety bonds and how they could act as possible shock absorbers for public infrastructure projects.