The Government of India recently announced a strong push for infrastructure in the Union Budget 2023, with a planned spend of $1.4 trillion in three years to reach the $5 trillion economy landmark. However, to achieve this ambitious goal, the government will need large amounts of guarantees that can be provided by surety bonds instead of bank guarantees.
Surety Bonds: Key Role in Infrastructure Push
Surety bonds are not uncommon and work beautifully in developed economies such as the US. A recent study by the consultancy firm EY suggested several benefits of surety bonds in managing risk and providing long-term value in construction projects. The study found that default by contractors on non-surety bond projects was 85% higher than on projects protected by surety bonds. In addition, it found that projects without surety bonds are more likely to default than those with surety bonds, perhaps by as much as ten times.
Surety bonds also reduce contractor pricing due to increased confidence in the general contractor to complete the project and increased ability to pay the subcontractors. Contractors who opt for surety bonds have higher chances of completing the project on or ahead of schedule. Even amid financial difficulty, they are more likely to prioritize completing surety bond projects.
Surety Seven: Revolutionizing the Surety Bond Ecosystem
Surety Seven is the only company in India that provides technology for surety bonds with support from reinsurance companies outside of India. Its impact on the surety bond ecosystem in India has been significant. Furthermore, with Surety Seven, small businesses can now compete for jobs with other large companies and prove crucial in the country achieving its $5 trillion economy landmark.
Surety Seven has also brought a digital revamp to the surety bond sector with its technology. This technology can be transferred to even established markets like the USA where surety bonds have become a stagnating market. Surety bond technology by Surety-Tech players like Surety Seven is going to rejuvenate the stagnating surety bond market of the west.
G20 Summit and Infrastructure push with Surety Bonds
The concept of surety bonds was established in India at the G20 summit, where it was mutually beneficial for G20 countries to support India’s surety bond market and reap the benefits of having access to this new multi-billion dollar market. Important to note that the tagline of G20, “Vasudhaiva Kutumbakam” or “One Earth · One Family · One Future” reflects the shared responsibility of G20 nations towards the well-being of the world.
Surety bonds are going to play a critical role in India’s infrastructure push towards the $5 trillion economy landmark. The success of surety bonds will rely on the availability and acceptability of such products, and that has to be a joint effort on the part of policymakers, regulators, and insurance companies. Surety Seven is revolutionizing the surety bond ecosystem in India with its technology and support from reinsurance companies outside of India. With the widespread adoption of surety bonds, small businesses can compete for jobs with other large companies and prove crucial in the country achieving its $5 trillion economy landmark.