Government should offer well-structured and de-risked projects along with a good dispute redressal mechanism if it wants to attract private sector participation in the infra space, NITI Aayog chief executive Amitabh Kant said today. “Government needs to create a series of projects, which should be put out in the market for the private sector to participate. These projects must be well-structured and totally derisked,” he said. Participating at a panel discussion on private-public partnership in the infrastructure sector, at the construction equipment exhibition and conference organised by industry lobby CII here, Kant said there should also be a good dispute redressal mechanism so that disputes, which are likely to arise, are resolved without much delays and much cost. Kant underlined the private sector is not here for “charity” and the public private partnership projects should be structured from the long-term point of view, so that the private sector gets a good rate of return and creates wealth.
The construction sector needs to grow at 50 per cent per annum if the country is desirous of accelerating economic growth to 9-10 per cent. “In the next five decades we aim to do very compact and dense urbanisation compared to what we have done in the last 5,000 years. Government has not only provided impetus to 100 smart cities, 50 metros etc. but we also see a significant impetus to the railway and irrigation sector,” Kant said.
Talking about attracting cheap funds for infra projects especially from banks, he pointed to asset liability mismatches and said long term investors like pension funds are the only solution. “One of the basic problems in financing infra projects is that an infra loan comes for 20 years or more but bank deposits are only for five years or even less. So we need long-term funds for infrastructure development and that can come only from large pension funds,” he said.
Inaugurating the conference, Union Heavy Industries Minister Anant Geete assured the construction equipment industry of full government support and added government is keen to spend up to Rs 8 trillion in the coming years for infrastructure development.
“I am confident that our government will support all companies to make the prime minister’s vision of make in India a successful one. The constitution of equipment makers have good opportunities as there is phenomenal investment being experienced in the Infrastructure sector. We’ve launched a slew of schemes to promote the capital goods industry,” Geete said.
The domestic construction equipment industry which peaked in 2011 went through a down-cycle for four straight years from 2012 until 2015, Excon chairman Sondhi said adding, “this year as an industry, we’ll surpass our previous best year of 2011 with a growth of 14 per cent.”