A More Durable Relationship—The Case of Canadian Funding of Indian Infrastructure

India needs to spend 7%–8% of her GDP on infrastructure, while the actual expenditures are much less. As a result, there is a large infrastructure financing gap. Canadian pension funds are helping to bridge this gap and are very active in the Indian infrastructure market. It has been estimated that the cumulative investment of Canadian pension funds into India is over US$75 billion. India courts pension fund investments into infrastructure, like the rest of the world, as they do not suffer from asset-liability mismatch associated with bank financing of infrastructure. Investment in Indian infrastructure also produces handsome returns for these investors. This mutual utility of Canadian pension fund investment into Indian infrastructure makes such investments durable and long term with little chance of change in strategy based on short-term events, like the recent diplomatic spat between the two countries. JEL Classification: O16, O18