Infrastructure — The key word for the government to achieve its ambitious target of 9 percent growth per annum in the next five years. But with a slowing economy, high interest rates and more importantly delayed decision making, infra projects and infra companies may face an uncertain future.
Vinayak Chatterjee, Chairman of the CII Task Force on Regulatory Framework and Infrastructure told CNBC TV 18 that infrastructure sector has been hit by a tripple whammy— declining order books, delayed projects and rising commodity prices.
AFP
He explains that even though the government can do very little about planned expenditure, the share of infrastructure in non-planned expenditure is a whopping 48 percent. Since half of the government’s discretionary spend goes towards infrastructure, it should focus on the issue of declining order books and try to break the cash cycle. Most importantly he points out that a combination of these two, including inflation and rising commodity prices should be the government’s main concern.
“Infra space is money hungry, so basically you need a lot of money to come into the sector and money will come in only when people in this who are investing, feel safe to invest money. I think the policies have to be long-term.”
Another key challenge for Pranab-da is demand for import duty on imported equipment for power plants and that too from a particular country, eh said.
Rajiv Agarwal, member, CII National Committee on Infrastructure, and the managing director and CEO of Essar Ports is hoping for a reduction in the cost of borrowing in the infra space by way of refinancing existing loans.
‘I would like the cost of borrowing to come down because with the current cost of borrowing in the infrastructure sector, it is extremely difficult especially things like ports, roads etc which take a very long time to come about.” says Agarwal.
Watch the full report on CNBC TV 18: