Investment in railways will aid economic growth: Suresh Prabhu The world is again interested in India’s growth story. The power sector has got a good share of the $100-150 billion investment, and that has led to immense development in the sector. Not much was invested in the transmission & distribution space, but private players came in. It was a similar story in the roads sector, where growth happened after private investment came. But these have declined in recent times. A similar kind of investment is needed in railways as well. When there is little investment, quality of service goes down. ‘Make In India’ is Prime Minister Narendra Modi’s most ambitious and relevant programme, and investment in railways will boost it. Railways need an investment of at least $100 billion in the next few years. With railways’ growth, there will be a pull for demand in allied sectors like steel, cement and locomotives. There is a growing need to create new financing instruments for infra projects. We need to look at longer pay periods and new financing instruments. There is enough scope for the private sector to invest in infrastructure development of the country. Public companies could be used as growth engines. Why can’t we look at a joint venture of companies like NTPC or Coal India with the India Railways, to augment the country’s rail infrastructure. This way, they could look at expansion in their own business and interests, and also push India’s infra growth. (Suresh Prabhu is the Union railway minister) Its Possible to cut subsidy without affecting the poor: Dharmendra Pradhan If power sector was not opened through the reforms initiated in 2003, India would still have been in darkness. If independent power producers had not come and set up projects, the benefits accruing from public sector undertakings (PSUs) alone might not have been enough. But over many past years, there has been very little or no emphasis on some of the key issues, such as fuel supply for projects. The 10th round of bidding for oil & gas blocks under the new exploration and licensing policy (Nelp) will take place soon. On this platform, international competitive bids are invited and 100 per cent foreign direct investment (FDI) is enabled. A key area of objection on Nelp has so far been the fact that only two-three of the 100-plus fields awarded have been monetised. The new government is trying to put in place a progressive and transparent model for bidding under future rounds. We are looking at all options, researching on all possible models available globally and talking to all stakeholders. The idea is to understand if it is possible to bring in a model that combines the best of all models — production-sharing contracts, revenue-sharing, etc. Policy reforms are a major challenge before the new government. I am sure India will, in the next 10-15 years, move to a double-digit economic growth rate. That will require meeting the aspirations of public transport, higher education, power consumption, healthcare facilities, among other things. We must also remember that it is possible to bring about reforms without impacting the poor. The idea is to streamline and target subsidies better. (Dharmendra Pradhan is Union petroleum minister) Acquiring land isn't enough, you need linkages: Arup Roy Choudhury When we conceive a project, we must examine if we are asking for too much land. We should do that in the beginning. Once you do, all begin to try their best to to see that the needs are minimised. Let us all understand that whether or not I agree to sell my land should be my choice. The moment an understanding is reached — and there is a willing buyer and a willing seller — the government should not interfere. Saying NTPC does not have problems is not correct; we also have problems. At times, being in the public sector is difficult. The problem comes when you make some rule; in our country we always know how to twist rules. Acquiring land is not enough; you need to have linkages to the land — roads, railways. We will always have land constraints, given the density of population and because of confusion created by different types of laws. So far as capital is concerned, a huge amount of money is available in this country. But nobody is comfortable investing that money because of issues in our financial system. They are comfortable hoarding instead. (Arup Roy Choudhury is chairman of NTPC) Need for 200-bp interest rate cut: Ravi Uppal It’s time the Union government and the Reserve Bank of India (RBI) took the bold step of lowering the interest rate by 200 basis points, to give a big boost to the infra sector. RBI has reduced the rate by 25 bps; that is good but not enough. To make the public-private partnership (PPP) model successful in the infra sector, the entry barrier needs to be lowered, so that new entrepreneurs can come into this sector. We cannot keep going to old major players again and again. The land issue has become highly political in the past five years. State intervention in land purchases should be kept at a bare minimum; the issue should be left to the buyer and the seller. The land Act that came earlier had some serious provisions not exactly conducive to industry. It was almost like a company purchasing land would have a lifelong responsibility for the people selling it.
In the past few years, there have also been instances where land was not handed to industry by the government even after sale.(Ravi Uppal is MD & CEO, Jindal Steel and Power) PPP model needs revival: Aniruddha Ganguly Patience, passion and perseverance are GMR’s ‘PPP’ for getting into public-private partnerships (PPPs). PPPs have mostly failed in the past six or seven years. Since the Union Budget, I have not heard of the 3P India project — for which Rs 500 crore had been proposed — to support to PPP projects. We don’t know what happened to that project. Civil society needs to reconcile with the fact that land will be needed for industrialisation. The government needs to identify land parcels for infrastructure projects and offer those for industrial development. We have talked abroad about pension funds, but even they (foreign players) are sceptical due to the retrospective tax regime here. The retro tax regime in India is still confusing, and there is a logjam over GST (goods & services tax) as well. The government needs to learn to let go. It is, for example, running out of excuses to run an airline; dilution of a two to five per cent stake is a joke. (Aniruddha Ganguly is president for strategy & development at GMR Energy) Private players face more land acquisition hurdles than public-sector ones: Rathin Basu Land is a political enabler for the infrastructure sector. Since 2013, there has been a failure in the process for land acquisition by developers. Though land remains a critical issue, the positive part is that we have a strong political leadership. We might not have eight-nine per cent economic growth until the land acquisition process is made smooth. If you want to move forward, land acquisition has to be made easy. Passing an ordinance was a quick move but it needs to be passed in Parliament. I hope that happens sooner; in the past, there have been instances where developers have got land but have later had to return it after legal issues. The process should be fair and transparent. But one thing is certain that we will get a better view over the issue in 2015. I would say the public sector, which has a positive image of working for the economy, has an advantage over private companies in terms of land acquisition. So, the process for land acquisition by public-sector players is seen as positive by states. Private companies, by comparison, face more hurdles. (Rathin Basu is country president, Alstom India and South Asia) With Basel-III, banks will have less flexibility to lend to projects: Santosh B Nayar Infrastructure in our country has been substantially funded by banks. For them, an elephant in the room that no one is talking about is Basel-III norms. Once these norms kick in, banks will have less flexibility to lend to projects. The projects will not get rated by agencies till you complete at least a year of operation. Even if the banks are willing, they will not have the capacity to lend to projects after Basel-III is implemented. The gap between the economy and banks’ capacity to lend has actually widened. Besides, Irda (the Insurance Regulatory and Development Authority) has allowed LIC to use part of its cash surplus to fund infra projects. In infra funding, 20 per cent is equity and 80 per cent debt. LIC only funds 25 per cent of the equity, or five per cent of the total. So, in reality, LIC’s infra financing is only five per cent of the total requirement. And, only 2-3 per cent of the Employees’ Provident Fund Organization’s incremental corpus can be used to fund infra needs of the core sector. It is imperative that we find alternative means to finance projects. We need to develop more infrastructure financing institutions like IIFCL (India Infrastructure Finance Company Ltd). Nothing prevents us from creating non-banking financial companies for infrastructure outside of Basel-III. The problems do not occur when banks lend for infra financing. They do when the project in question faces issues like delays, cost over-runs, land acquisitions, etc; the macroeconomic situation also matters. It is not possible for the Reserve Bank to modify the rules to suit a particular sector, just because that sector is in trouble. I am sure lending for infrastructure from banks will also pick up as the economy picks up. (Santosh B Nayar is CMD of India Infrastructure Finance Company) Need for joint investment pool to fund infra development: Vinayak Chatterjee Much of the process for acquiring land is going to be smooth and the discussion of problems part of history, unless Parliament decides to repeal the new land acquisition ordinance. Every state has a fiscal capacity to fund infra projects. As a new measure of thought, the corpus to fund infra projects could come from cash reserves of public-sector undertakings (PSUs), through formation of a joint investment pool. Meet its annual fiscal deficit target is each government’s temptation. As long as dividends from PSUs continue to be channelled to meet the deficit, prospects of infra growth will stand stymied. The money accrued from sale of stake in PSUs is sent to the Consolidated Fund of India, and there is no way to determine how this money is utilised. What is the point of disinvestment if the government does not circulate the money back for future infrastructure investments? There is an urgent need to form a separate pool for infra sector investment. A public-private partnership (PPP) contract, when formed, is inherently incomplete. As an extension of that, future renegotiation possibilities have to be factored in contracts. However, the possibility of renegotiations should be so transparent that it precludes any possibility of crony-capitalism. (Vinayak Chatterjee is chairman of Feedback Infrastructure)