The first 100 days of the Modi government have been encouraging. Now the Centre is firmly moving to mission mode. There´s much that the infrastructure sector can look forward to in the days to come. Let´s look at the various initiatives that the government plans to unroll.
Aviation is set to take off. For a country the size of India, the aviation sector has not been able to reach every remote corner of the country. All that is set to change as the revised policy for regional and remote area connectivity is set to be announced. The Directorate General of Civil Aviation may finally become an entity of the past, as it will be replaced by an industry-friendly Civil Aviation Authority. My only grouse is that privatisation of Air India does not seem to be on the cards.
In fact, the Indian airline behemoth is reportedly considering an REIT issue to get itself out of the financial mess that it finds itself in. REITs have been touted as the ultimate panacea for the real-estate industry, which is often starved for commercial advances. The regulatory environment and market sentiments are just right for the launch of REITs, but a few players have asked the government for greater clarity on the tax breaks proposed to be offered for this investment vehicle. Assets included in REITs have the potential to reach $20 billion by 2020, according to a few reports. I have only one comment to make. Issuers of REITs should ensure that their offerings are backed only by top quality realty assets. The entire real estate industry stands to gain, because it has often been criticised in the past for going after dubious avenues of financing.
Elsewhere, I have written at length on the whole coal block de-allocation issue. My only hope is that the Centre gets around to auctioning of the coal blocks in at least a month´s time. Many plants are facing a coal shortage. What´s heartening is that the Ministry has also started to take some commonsensical decisions (at last) like rationalising coal linkages.
In simple terms, this means that no longer will coal be transported across the length and breadth of the country, allocations will be amended and swapped to ensure that mines are not far away from power plants.
On the Jan Dhan Yojna to promote financial inclusion, I would have preferred a more calibrated approach. The banking industry is saddled with enough NPAs, and this Yojna is not clear on aspects like the eligibility of existing account holders for the Rs 1 lakh accident insurance cover, etc. However, with barely a third of the population currently having access to a bank account, this scheme has the potential to channelise small savings into sectors (read infrastructure) crying out for funds. Many chinks have to be ironed out, though.
The PM literally ´drummed up´ support for India during his Japanese tour. Japanese FDI will double over the next five years to $35 billion. Investments in the various industrial corridors and the proposed bullet train are most welcome. The biggest advantage that India enjoys in its relationship with Japan is that New Delhi can collaborate with Tokyo even in matters of strategic national importance as compared to Beijing. That´s why you are going to have two Japanese nominees based in India (who will operate under the PMO´s guidance) for coordinating investments and project development between the two countries.
All in all, it´s been a hectic 100 days for the new government. And Modi is just the person who´ll not rest on his laurels, but take fresh guard after this century.