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.
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.
(Arup Roy Choudhury is chairman of NTPC)
Patience, passion and perseverance are GMR’s ‘PPP’ for getting into public-private partnerships (PPPs).
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.
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)