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By 2050, 60percent of India´s population will reside in towns

By 2050, 60percent of India´s population will reside in towns

Land acquisition remains a major issue, and delays projects and throws them into uncertainty, says Ashish Tandon, MD, Egis in India.

Research indicates a significant shift in infrastructure investment away from Western economies to the Eastern hemisphere. Are India, China and other emerging economies mature enough to handle the sheer incremental volumes of infra projects over the next decade?
Western economies like Europe and the USA are already quite advanced when it comes to infrastructure development compared to the developing countries. In comparison, economies like China, India and rest of Asia are still showing high growth which would require a lot of infrastructure support to back up this growth. Therefore these countries, at least in the next 10 years, would require huge investments in the infrastructure sector and are attracting attention on foreign investments too, that can fund these.

No doubt these economies are still in their growth trajectory and handling capabilities too are on the rise. The sheer increase in year to year handling of projects could be good evidence demonstrating this. However, capacity-building measures at local implementation level may be necessary to facilitate this, apart from a greater level of finance management, transparency and ethical compliances.

What is the nature of recalibration needed to ensure ground level deliveries in the sector on parameters of competence, efficiency and financial management to maintain global standards of development?
The government has been working on a lot of initiatives like one-window approvals, regular monitoring of projects by the PMO, model concession agreements, contract frameworks, etc. But there is still lot more to be done to keep up the pace. In terms of competence and financial management at the ground level, some of the states have already gone in for capacity building and quality enhancement measures for its implementing staff or have coupled it with services from international consultants, the idea being to have better experienced resources on ground sharing the global standards/experiences. Such hand holding might be a useful mechanism. As regards to efficiency, one of the major concerns remains is the land acquisition (issue) which delays projects and puts projects into uncertainty.

With Europe also poised in 2018 for positive growth for the first time since the 2008 financial crisis, what are the lessons from the pre-2008 mistakes of financial (mis-) management that need to be incorporated by Indian industry and the banking sector?
I feel that the financial crises in Western countries were due to overstretched leveraging positions adopted by financial institutions apart from overlooking the financial safeguards. As an engineering consulting and operations company, we really can´t comment on it.

What are the pre-2008 mistakes that should be avoided by industry and financial institutions that fund infrastructure while undertaking the massive infra development that is projected in India?
As an engineering consulting and operations company we may not be appropriate to comment on this issue, as it is for the financial institutions to play an active role in avoiding the pre-2008 mistakes.

Various reports have indicated the need for financial safeguards, reforms to reduce predominance of financial markets in determining a government´s macroeconomic policies and strengthening of national regulation and supervision of financial markets.

With an estimated 500 million people expected to shift from rural settings to urban regions in India over the next 40 years looking for a better quality of life, how can the infra sector maintain a healthy/accelerated pace of professional development?
It is estimated that by 2050, 60 per cent of India´s population shall reside in towns, as compared to 31 per cent in 2011. According to a report on World Cities by UN Habitat, an extra 300 million new urban residents are projected by 2050. Cities shall need to keep pace to manage complexities, reduce expenses, increase efficiency and above all to improve the quality of life, which is the basic aspiration for the migrating population too. And to aid this, the vital element shall be creation, augmentation and management of infrastructure facilities. Not only the ways in which infrastructure is delivered, but also its entire cycle of operations and management, including asset management, would undergo changes by bringing in new technologies of construction, improved materials, and synthesis of smart applications.

The government has already started proactively working on the infrastructure for cities, over the years. The ambitious Smart Cities plan which aims to cover 100 cities, is a key step in this direction.

Schemes like AMRUT, various public transit projects are all steps towards meeting and overcoming these challenges. So if the government is consistent in its efforts, I am sure India and the Indian economy can comfortably continue to grow supported by infrastructure.

Prime Minister Narendra Modi has called upon the capital and bond markets to spur the ongoing infrastructure development plans as a social commitment. How does the industry respond to this expectation, considering that the Indian government has already facilitated policy decisions to create an enabling climate for investment in infra?
The government has planned investment of a trillion dollars towards infrastructure. This money will come either from direct funding by the government, foreign investments or markets. So as the government is aware of the urgent need for infrastructure development and is supporting it in every way, I think it should be a positive step that the markets will be supporting infrastructure development. It is a win-win situation for both the markets and the country´s economy as both would benefit from robust infrastructure development in the country.

A PwC report emphasises the need for a hands-on-approach by CEOs of infrastructure firms in respect of operations as well as data analysis. Are you as a head honcho running operations able to seamlessly access live, real time information for all capital projects of the organisation in the Indian business sector?
Yes, our internal systems are absolutely robust and we are therefore able to get information real time.

Is there adequate digital competence and application ability to move from the mindset existing today, to make this vision a real probability?
More and more players are embracing latest technologies, be it software for procurement, design and operations, or accessing the latest knowhow or global best practices in their everyday works. Our younger population has also been showing keen interest in adopting technological advancements. Adaptability too exists. Hence I am very sure this vision shall become a reality.

China has always outpaced India on most sectors of achievement and parameters of infrastructure development. Is India likely to catch up or even surpass the Chinese as is being ambitiously talked about in the new narrative for Indian industry?
I think India and China are two different economies so comparing them is not fair as they both have their own set of opportunities and challenges. But I am confident that both the economies will continue to play a very important role – not just in Asia but the world economy, for many years to come.

Which hybrid financial models would be the mainstay of infrastructure investments in 2017? Will the PPP model find traction over the next two years or are EPC and hybrid annuity models here to stay?
The infrastructure growth in India in the coming decade will be so large that I don´t think one single investment methodology will work. So I feel all the models of investments are here to stay. However in the short-term perspective of two years, PPP though would gain more acceptance, but the infrastructure financing models shall still need government support through hybrid models, due to imbalances in cost versus affordability of the serving population, political will and gestation periods.

A lower interest regime and focus on capital and commodities markets has been espoused by PM Modi for creating infrastructure finance. How can this be done without adversely impacting the infrastructure business, as the recent demonetisation drive has done by bringing the entire cash-based transactions (transportation, contract workers) to a halt?
Finance continues to be the most critical need for infrastructure development. Lower interest rates I feel will encourage more investments in the stock markets, and if stock markets start investing in infrastructure projects then I feel it´s a win-win situation where long term investors can gain from these investments and the same time, the infrastructure projects lacking funds can find some respite. So I personally feel it´s a good move…

What are your expectations based on industry talk from the forthcoming Union Budget for the 2017-2018 fiscal year? What would you like to place on the infra industry wish-list for a positive fallout on the sector?
Infrastructure needs consolidation through government policy. The trend from 2016 which contained significant thrust to the infrastructure sector should be continued, with more key projects to be taken up. We also need development of a financial mechanism for banking institutions to tide over the challenge of increased fund availability for infrastructure development with suitable checks and balances; projects from sub-sectors such as railways and aviation gaining momentum, apart from acceleration of projects in the highway sector, are some of the items in the wish-list for a positive fallout on the sector.

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