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Chief Economic Advisor Arvind Subramanian on Friday said low oil and commodity prices will help strengthen the macroeconomic fundamentals at a time when the external environment poses a challenge and has led to a fall in exports.
“India continues to be a haven of macroeconomic stability,” he said at the India Investment Summit 2016, while urging foreign investors to fund domestic infrastructure projects.
He said amidst high uncertainty in the global economy, the slump in oil, steel and cement prices provides a good opportunity for investing in India.
“Although it is a challenging time, it is a kind of positive shock for investing in infrastructure. If oil, steel, cement, commodity are down, the cost of building infrastructure comes down and returns to infrastructure goes up,” he said.
Urging investments in infrastructure, Subramanian said private investments and consumption are necessary drivers of domestic demand in the challenging international environment and also outlined government plans for public investment.
High priority areas
“Railways, road, irrigation are going to receive high priority. So there is emphasis on domestic investment and international environment has made return on investment actually go up,” he said.
Minister of State for Finance Jayant Sinha also underlined government efforts to address challenges in the infrastructure sector.
“We are working very hard to understand what the issues, challenges are and what further we need to do as far as the law, regulation and project structuring are concerned, so that we can present to you attractive returns and where risks are much lower,” he said, adding that projects worth $150 billion are in various stages of completion.
Urging investors to consider investments in brownfield projects, he also announced that the Centre is trying to rethink the financing of greenfield projects to ensure that they get the cash flow as early as possible. Sinha said the Centre has also asked State governments to send their project pipeline, which can be made a part of the deal flow of the National Investment and Infrastructure Fund. “We are working in collaboration with States on the NIIF,” he said.
Reserve Bank of India Deputy Governor HR Khan also assured investors of support and said, “We are open for regulatory changes. We are sensitive to demands.”
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