Project execution is vital in India

MUMBAI,AVINASH MISRA: Infrastructure is one of the key growth drivers for our economy. By developing world class infrastructure, we can efficiently and safely connect our people and places which will result in much-needed employment opportunities and ensure India’s overall development. It is encouraging to see that the government has promoted several initiatives, especially in the infrastructure sector, such as the 100 Smart Cities under the Ministry of Urban Development; the creation of new industrial townships in Dholera and Shendra along the Delhi-Mumbai Industrial Corridor; metros in some of our major cities and now, even a bullet train between Mumbai and Ahmedabad.

Avinash Misra

Most of these projects are now approaching the construction stage and it is therefore imperative that the budget sets aside seed capital to jump start these projects. Most of the Public Private Partnership (PPP) projects in the public infrastructure space will need government support in the form of “gap funding” to get them started. The budget should therefore clearly address these types of projects and examine the gap funding possibilities. Also, with infrastructure investment set to increase dramatically, new avenues of raising capital should be examined in the budget. Municipal bonds have not been used much in India and maybe a good source.

Though a lot has been said about the ease of doing business in India, there needs to be more tangible and visible action on the ground through greater policy changes to encourage more investments to flow into the country. The slow pace of project implementation acts as a deterrent to foreign contractors to do business in India especially in the more routine sectors such as roads, water and waste water. The delay in implementation is a major impediment to the development of infrastructure across sectors, including highways and bridges, rail, metro, aviation and smart cities. The reasons for this vary from delayed approvals and little accountability to a general lack of urgency on behalf of the political system. The government, therefore, must develop a comprehensive framework involving various stakeholders to ensure timely implementation of the programmes and big ideas. Delhi Metro is a classic example of this.

With increased construction, India needs foreign companies to participate. One way to encourage foreign participation is to establish procurement and contracting practices that follow international standards. The government needs to lay a clear road map for the foreign investors in the country to not only address their concerns around policy instability and paralysis but also to provide the comfort of long-term, stable investments in the country to raise their appetite. This would entail policy changes and repositioning India at a global level to change the view of investors. There must be concerted efforts in this direction to invite and attract the big players to support India’s exciting future for the long term.

This time the government may also focus on a sector that has been in trouble for many years and also been largely neglected — real estate. The issues have become more complex with a severe liquidity crunch in the market that has not only impacted the timely delivery of many projects but also eroded investor and customer confidence. The growth in this sector directly or indirectly affects the infrastructure development in the country too.

Specific measures must be taken by the government to address the current situation by generating renewed interest and confidence in the sector. Some corrective measures could be lowering of interest rates on housing loans; easing the funding norms for the banks to address the liquidity crunch; create a single window clearance mechanism for the new projects and ensuring developers act with transparency and are accountable for the success of their projects.

This budget, I hope, while reflecting the government’s current priorities, will continue promoting the growth vision envisaged by the Prime Minister from the last budget which includes the Skill India, Make in India and more recently Start-up India initiatives.

NOTE: The author is country director, AECOM India