Rishabh Sethi, Executive Director, SPML Infra Limited
IndiaÂ’s infrastructure has been improving slowly but steadily over the recent years. Infrastructure sector growth in India has been on the rise in the last few years due to several reasons and it has given a major boost to the countryÂ’s economy.
Initiatives: The infrastrÂucture sector was one of the thrust areas in the Union Budget 2012-13, the government announced a number of propÂosals, including allowing financial institutions to raise about Rs 60,000 crore from tax-free bonds and envisaging a greater private participation. The allocation to the highways sector has been enhanced by 14 per cent to INR 25,360 crore for 2012-13 and the government has set a target of covering 8,800 km roads under National Highways Development Project. The allocation to develop rural drinking water and sanitation facilities has increased by 27 per cent from Rs 11,000 crore to Rs 14,000 crore. The urban infrastructure for water and sanitation and telecommunications sectors also achieved enhanced investment.
Mechanisms: There should be a mechanism to ensure planned and expeditious implementation of infrastructure projects. Currently, there is a large gap between the time of announcement of projects and their award. Also, there is intensive activity in awarding a large number of projects in a short time. It is essential to phase the projects in a continuous manner in order to optimise the scale up of resources in the infrastructure sector.
As this is just the beginning of the infrastructure boom in the country, the industry needs to prepare for execution needs. With the ramp up in manpower and other resources, Infra companies will be in a position to cash in on opportunities both domestically as well as interÂnationally.
The government must try to revive unfinished projects by tweaking the concession agreements with some compromises. The banks will be encouraged to provide easy loans to infrastructure companies to bail out their financial crisis and complete the PPP projects on time.
One of the crucial needs is to provide adequate compensation for increased prices of essential raw materials that will help companies to absorb price escalation during the implementation period as it is not possible to factor in such extraordinary increase in prices at the time of tendering for the projects.
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