Relax infra investment norms: CFI to govt

The Construction Federation of India (CFI) today said the government should relax investment norms to enable infra projects avail pension and insurance funds for which "very strong" ratings are currently required.

"Currently, investment by insurance and pension funds are mandated to invest 15% of their corpus in the infra sector. However, this is restricted for projects having a minimum rating of AA+ and above. Most of the projects during construction and operations will not be able to qualify for those kind of ratings," CFI President Ajit Gulabchand said.

In a pre-Budget wish-list, already submitted to Finance Minister Pranab Mukherjee, Gulabchand said government should not insist on AA+ ratings projects only to permit access to such funds, but should allow projects with lower ratings to exercise these options.

An AA+ rating by agencies like Standard & Poor's or Fitch indicates that the obligor has very strong capacity to meet its financial commitments.

CFI has also urged the government to introduce sector-specific financing instruments in areas like road, real estate, power and ports since these sectors were facing dearth of adequate funds for the execution of their projects.

Calling for enhancing sectoral caps for banks for lending in the infrastructure sector, the confederation of the firms belonging to the construction sector said that current limits were proving to be inadequate as the requirement of funds was going up everyday in proportion with the project size.

"This step will enable banks to increase their exposure to the core sector," it said.