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Govt needs to share risks with private companies in projects: L&T CFO

The govt needs to share risk with private companies it partners with 'and not just talk about what can be done' in a project, Larsen & Toubro chief financial officer R Shankar Raman said Wednesday

government of India | L&T

Press Trust of India  |  Mumbai 

L&T CFO, R Shankar Raman
L&T CFO R Shankar Raman

The government needs to share risk with private it partners with "and not just talk about what can be done" in a project, Larsen & Toubro chief financial officer R Shankar Raman said on Wednesday.

He also called out regulatory overreach and over regulation as one of the biggest risks when it comes to India, saying that such a posturing destabilises growth.

The belief that private capital can court larger risk is "misplaced" and there has to be an "optimal risk share" between the government and the private partner in a project, Raman said.

"partnership in its true sense means holding hands and not just leading the horse to the pond and watching the fun," Raman said, speaking at the annual SBI Conclave here.

The bureaucracy and thought leaders in the government need to "evolve" to understand the risk aspect, "and not just talk about what can be done", Raman said, urging the government to play an enabling role.

Asserting that he is "intimately" connected with projects and has also pitched for pre-clearances for projects, he said such a move can help in higher capital flows into the real sector because projects entail big risk.

Raman said the pace at which dispute resolutions are being handled at present also leaves a lot to be desired. He said he has repeatedly come across situations where sanctity of the written contract has come into question.

"if you're going to sit across with a counter party who is more powerful than you are and get into conciliation, conciliation can go only one way and that would mean loss of value for private capital," he said, warning that banks and investors who backed a project will get worried because of such a thing.

He added that there is no dearth of contracts and projects in a country which is full of growth opportunities, and "we need to address the challenges better".

Raman called out the demographic dividend, an aspirational population and high growth in a volatile world as India's strengths at present.

He said given such strengths, the country is in a good position to dream about its growth aspirations for the next 25 years as it has done with the 'Amrit Kaal' call of the government.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Wed, November 23 2022. 22:53 IST