Finance Minister Nirmala Sitharaman and senior ministry officials met representatives of the infrastructure sector on Wednesday, the latest of the many sectoral meetings she has had in the past one month.
The meeting came in the backdrop of India’s gross domestic product growth slumping to six-year low of 5 per cent in the April-June quarter. Experts have said a capital expenditure boost focused on infrastructure by the private sector, and the government is a way out of the slowdown as the centre looks to create jobs.
In his Independence Day speech, Prime Minister Narendra Modi had said the Centre will invest Rs 100 trillion on developing modern infrastructure that will aid in nearly doubling the size of the Indian economy to $5 trillion in the next five years, which has been his administration’s stated aim.
In the meeting, representatives of infrastructure companies like Hindustan Construction Corp, NHAI, Ircon, and others discussed issues related to financing, land, capital and environmental clearances. There were suggestions on how to speed up execution of projects.
Participants described the meeting as fruitful and said that Sitharaman seemed positive in terms of looking to resolve pending issues quickly.
Emerging out of the meeting NHAI chairman N N Sinha said, the state-owned company’s construction expenditure is on its way to outstrip that of last year. "We are well on way of meeting the targets we have set for ourselves. So far we have awarded 600 kilometres worth of road projects," he said.
HCC chairman and managing director Ajit Gulabchand said there is a need to make the sector more investor friendly. “The meeting was on what troubles the construction and infrastructure sectors. The aim was to discuss solutions so that you can make it more investor friendly to invest in and to complete contracts more easily. The Finance Minister listened with great intent and she seems to mean business. We should be able to expect some good coming out of this,” he said.
“Some restrictions in financing are there because of companies having taken projects at very low rate. They could not execute the projects and their bank guarantees got encashed, so bankers have their own challenges,” Ircon chairman SK Chaudhary said.
Narayana Raju Alluri, MD of NCC Urban Infrastructure Limited said that the the state-owned construction firms were asked to contribute to the Prime Minister’s stated aim by carrying out Rs 100 trillion worth of construction. “For this, support is required for construction companies from banks in terms of bank guarantee and cash flow support. Lot of funds are being held up by clients so we requested FM for easing of cash flow,” he said.
The participants also discussed standardization of contract documents to reduce dispute and how difficult it was becoming for companies to realize cash flows because of arbitration.
In her first set of sector-specific announcements last month, Sitharaman said that the government is setting up an inter-ministerial task force to finalize the pipeline of infrastructure projects. These projects would be monitored actively to accelerate capital expenditure and investments in the economy. She also said that some Rs 60,000 crore worth of delayed payments from the government and state-owned companies will be released soon.