Committing himself to increasing allocations for infrastructure projects such as rural roads, highways and the railways during 2016-17, Finance Minister Arun Jaitley said on Tuesday that public investments must lead the way during a global slowdown and India had an opportunity to spend more on infrastructure because of low oil, commodities and mineral prices.
“If you look back a few years ago, some of our infrastructure segments had slowed down. I find that the opportunity provided by low oil prices has enabled the government to channelise a large part of our savings into infrastructure. Last year, we gave a push in that direction, a push that we intend to continue,” he said, speaking at a function to mark 10 years of the India Infrastructure Finance Company Limited.
Stressing that there would be ‘no easy day’ in a world economy passing through a phase of volatility, Mr. Jaitley said it was up to India to take advantage of such challenging trends. “This is providing us with… an opportunity. But we must have the intellectual honesty to analyse our shortcomings...,” he said.
‘State institutions must act during slowdown’
Union Finance Minister Arun Jaitley on Tuesday referred to the lack of impetus to private sector investments in infrastructure.
“Worldwide, the experience has been that when the going is tough, state institutions have to take the lead. When the going is good, the private sector has an important role to play,” he said, speaking at a function to mark 10 years of India Infrastructure Finance Company Limited.
The resources deployed by the government in national highways, rural roads and the railways brought about a change. “In the last one year, a lot of stalled highway projects have got moving. As a result of enhanced public investment, even private players, who were bogged down in disputes with the highway authority, have now re-entered the fray.”
Funding a challenge
Mr. Jaitley said funding infrastructure projects remained a big challenge, and the government was hopeful of partnering sovereign wealth funds and pension funds that evinced interest in the National Investment and Infrastructure Fund.
Making an assessment of different infrastructure sectors, Mr. Jaitley said the Railways were on the right track but needed a forward movement. “Foreign direct investment has been allowed and announced by GE and Alstom in two large manufacturing projects in Bihar. The Ministry will soon come out with bids for redeveloping 400 stations,” he said. The Railways also intended to mobilise international investments and raise funds through tax-free bonds, he said.
Private investors, he said, were keen on investing in ports, but called for corporatising major port trusts that faced the risk of being overtaken by ‘minor ports’ in cargo traffic. As for airports, he said the government was focusing on improving managerial efficiency as investments had already been made to spruce up many mid-level and smaller airports.
“These can no longer be considered green-field or brown-field projects, so the Civil Aviation Ministry is considering a proposal to bring in management participation [from the private sector].”
