Plan to tap at least $1 trillion to develop infrastructure projects.
By R. Chandrasekaran
At a time when India wants the much needed foreign exchange to bring down its current account deficit, India’s finance minister P. Chidambaram is promoting the available unlimited infrastructure opportunities globally.
Chidambaram, leading a team of officials, has undertaken a three-nation tour to Britain, France and Qatar in an effort to attract big investments from the overseas as part of selling India growth story.
While speaking in London, the minister sought more investments in the infrastructure sector as the country offers unlimited opportunities to lay roads, airports and seaports. In the 12th five year plan, which is ending in March 2017, India has ambitious plan to tap at least $1 trillion to develop various infrastructure projects. For this, the government is also planning to hike the infrastructure investment in Gross Domestic Product to over 10 percent by the close of the period.
Chidambaram told reporters in London, “What I am telling the investors here and the government here is that there is a huge opportunity in India, especially in infrastructure.There is no other country in the world which requires so many thousand kilometers of road, so many airports, so many seaports, so much more capacity of steel, mining, power. So I think the opportunities are unlimited.”
The minister’s hard sell on infrastructure is quite understandable as India struggles to attract more investments in the infrastructure sector as many companies are going slow even on bidding for road projects in view of the bottlenecks faced by them.
His comments in London came on the heels of the British-based private equity player Actis’ reportedly ending $2 billion road joint venture with India’s salt to software conglomerate Tatas. Actis is likely to sell 35 percent stake to Tata group’s private equity firm Tata Realty & Infrastructure.
The slow down in economy has undoubtedly impacted the infrastructure projects too. The highways segment has also faced financing issues besides delays in land acquisition forcing the companies to either go slow or remain in the sidelines. For instance, companies like IVRCL, GMR and GVK are toying with ideas to sell their stake in road projects. There seems to be an estimated $10 billion work of road assets, either completed or under progress, are at stake for sale.
The minister’s aggressive push of infrastructure projects also assumes significance in the wake of the Reserve Bank of India’s comments seeking the government’s steps to remove bottlenecks for more infrastructure projects.
For its part, the government has indicated that it has set up Cabinet Committee on Investment (CCI) recently for specifically speeding the clearance of big infrastructure projects. As a result, investments worth $27 billion were cleared during this year so far.
To contact the author, e-mail: rchandrasekaran@americanbazaaronline.com