The Hindu Business Line : Infrastructure projects need more Govt funding

(From left) Mr K. Gowrishankar, Dean of LIBA, Mr Amal Kulandaisamy, Rector of Loyola College, Mr R. Ramaraj, Advisor of Sequoia Capital, Mr P. Christie, Director of LIBA, and Mr A. Emmanuel, Prof of OB, HR and Psychology, LIBA, at a meet in Chennai on Thursday. —

Our Bureau

Chennai, Nov. 13

Infrastructure companies see an increased role for the government in funding and expediting clearances of infrastructure projects to support development in the backdrop of the international financial crisis.

At a two-day seminar, ‘Liba Insight ’08, on management in challenging times,’ industry representatives were of the opinion that public spending on infrastructure has to be stepped up to drive demand for commodities, generate jobs and bolster a slowing economy. Government funding would also help address the funds constraint from overseas sources as a result of the international financial turmoil.

Mr S. Ramachandran, Director, (Business Development and Corporate Strategy), IVRCL Infrastructures & Projects Ltd, said increased government spending in infrastructure will drive demand for cement, steel and power which would have a cumulative effect down stream. The governments should also influence financial institutions support early financial closure of projects.

At the State Government level the infrastructure projects under the Jawaharlal Nehru National Urban Renewal Mission have to be expedited and delays in identifying and implementing projects avoided.

As economies slow down globally, production is hit, raw material prices are dropping, unemployment is on the increase and projects are being deferred. There is a demand for infrastructure but with bank funds drying up the Government has to step in during the interim period, he said.

Mr G. Venkatesh Babu, Managing Director, Lanco Infratech Ltd, said that as the private sector sees shrinkage of capital there is bound to be an adverse impact on infrastructure growth. Companies which had targeted a 15 per cent IRR in the backdrop of a buoyant market will now have to work on increasing efficiencies and tight margins. But the pent up demand for infrastructure is a positive feature. There is an opportunity for Indian companies which are leveraged minimally to generate funds.

Mr R. Ramakrishnan, Managing Director, GMR Industries Ltd, felt that companies would have to be more judicious in picking projects over the next three years as investments become a challenge. Issues such as hassles in land acquisition and delays in government clearances had to be addressed. India is among the lowest in terms of per capital consumption of steel and power. This he felt, was an indication of the opportunity in growing infrastructure. Bank funding and public private partnership were key features of infrastructure development.

The public sector investment in infrastructure has to be stepped up – a case in point is the chronic shortage of power. India has to be proactive in ensuring surplus availability.

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