The Centre has set up an inter-ministerial task force to draft a list of infrastructure projects coming up in the next five years. Finance Minister (FM) Nirmala Sitharaman on Friday said this panel will identify projects to boost modern infrastructure worth Rs 100 trillion, augmenting growth and creating jobs.
The task force would be under the Department of Economic Affairs. “The projects would be monitored actively to accelerate capital expenditure and investments in the economy,” said Sitharaman.
The FM also said an organisation would be set up to provide credit enhancement for infrastructure and housing projects, increasing the flow of funds to these.
“New business, capacity expansion and additional infrastructure will need equity and... debt. Each new factory and project in infrastructure has a multiplier effect in terms of jobs, economic activity, new value chains, and indeed a small ecosystem which gets built around it,” said Sitharaman.
In order to resolve the ongoing contractual disputes and delayed payment by the government departments and central public sector enterprises (CPSEs), these would be monitored by the Cabinet secretariat. The committee would also look at the Cabinet’s 2016 decision which asked CPSEs to pay 75 per cent of the arbitral award amount to contractors against a bank guarantee in cases locked in litigation.
The industry had mixed reactions to the announcements.
“Prima facie, they are good measures. The arbitration award point, however, does not help because banks do not give guarantees. Bank guarantees are needed to claim that 75 per cent of the arbitration,” said a chief financial officer for a road developer, who did not wish to be identified.
Manish Agarwal, leader, capital projects and infrastructure, PWC India, said, “It is a good move to formalise the pipeline of projects. However, several more measures will be needed. Even if the government spends continue, measures are needed to ensure EPC companies can match up to the requirements in terms of availability of working capital and expertise. Also, improving risk perception of the sector is needed to being banks and investors back.”