No magic wand: 6 things that beg next government's urgent attention

[caption id=“attachment_80077” align=“alignnone” width=“860”] Opinion polls and markets have sneered at the AAP and Third Front’s ability to engineer a fractured mandate. It seems the business and investor community have already elected a government led by the BJP’s prime ministerial candidate Narendra Modi. But any new government must implement reforms. So will the next government act like a facilitator or a landlord? Axis Capital has listed a reforms bucket that the next government cannot choose to ignore. And not surprisingly, the proportion of projects stuck with the Centre is the highest for sectors like metals, mining, and oil & gas. ( Image: Axis Capitl)[/caption]

[caption id=“attachment_79886” align=“alignleft” width=“860”] Opening up of the coal sector for private players is the need of the hour. The new government must enable an environment for state-run Coal India to take firm decisions. It should also provide faster environment/ forest clearances to captive coal blocks and implement policy to auction coal blocks through competitive bidding. (Image: Thinkstock)[/caption]

[caption id=“attachment_79890” align=“alignleft” width=“860”] The new government must boost infrastructure projects and get more private investment by awarding projects through the engineering, procurement and construction (EPC) model as a number of projects have been struggling since they were awarded on the build-operate-transfer (BoT) model. In the roads sector, delays in project clearances, unrealistic bids and a host of other factors have emerged as serious impediments. Progress on national highway stretches awarded under BOT has almost got stalled. According to Axis Capital, approximately Rs 10,000 crore worth of road projects are stuck for premium renegotiation.[/caption]

[caption id=“attachment_79906” align=“alignleft” width=“860”] According to Credit Suisse, getting the awarded projects completed is the biggest problem. The National Highways Authority of India (NHAI) and the government have been trying to sweeten these deals by postponing the premium
payments, but until traffic assumptions improve, or the deals are renegotiated, a pick-up in the pace of national highways development is unlikely, it says.[/caption]

[caption id=“attachment_79896” align=“alignleft” width=“860”] According to Axis Capital, 300 kms of railway linkage can help increase supply by 300 million tonnes. This, it believes, needs to be done urgently. Modi has spoken of urbanization (100 smart/ twin/ satellite cities) and railway reforms. But, the railways lacks financial muscle, and public-private partnership schemes are yet to take off.[/caption]

[caption id=“attachment_79898” align=“alignleft” width=“860”] Untangle the power sector, restructure state electricity boards (SEBs) and fix fuel supply issues: The sudden stoppage of working capital loans to SEBs, risks of fuel price pass-through schemes, and stalled reduction in AT&C losses has hurt demand growth. Axis believes only regular tariff hikes, regular monitoring by the finance ministry and using the influence of PSU lenders can solve the problem. “While SEBs is a state subject, Central govt can force these measures through Finance Ministry/ RBI by curbing lending to SEBs,” Axis Capital says.[/caption]

[caption id=“attachment_79904” align=“alignleft” width=“860”] The govt must revamp the energy sector, cut oil subsidies by ensuring diesel regulation and restart the direct benefit transfer in cooking fuel subsidy. It should also rationalise state-specific taxes on crude to provide a level playing field to all refineries.[/caption]