Modi's magic pulls India's infra sector back from the mire
It appears, that Prime Minister Narendra Modi's endeavors to kick-start the country's infrastructural projects are finally bearing fruits. Reports suggest that the NDA government has been able to make headway in providing the much-needed traction to get the stalled infrastructural projects moving once again. Infrastructure is the key to a country's growth and stagnation spells disaster for the same. Here's all about it.
There is no quick fix for an ailing sector
Reports say that in India, around 329 infrastructural projects are running behind schedule, 293 are suffering from cost overruns and 95 of them are suffering from both among the undertakings that are on the anvil. According to Bloomberg, 25% of 1,201 projects worth Rs. 16.9 trillion have reached a standstill and cost overruns have currently plummeted to 11% from the 20% as of March'15.
India needs $646 billion to meet infrastructural growth
Finance minister Arun Jaitley had earlier said that in the next five years, India would need an investment of $646 billion to meet its infrastructural needs. While speaking at the second annual meeting of the BRICS New Development Bank, the finance minister said 70% of these yet unmet investments will have to be directed to stabilize power, roads and urban infrastructural sectors.
Major hiccups and steps taken to solve them
The primary reasons that these projects are running behind schedule are the delay in land acquisition, clearances, rehabilitation and resettlement, local body permissions and contractual issues that are bogging down the process of expediting projects. Since his ascent to power, Modi has been setting targets for concerned departments, taking necessary steps to solve hiccups and also been encouraging offshore firms to set up units here.
Turning things around slowly
According to Manish Agarwal, leader, capital projects & infrastructure, PricewaterhouseCoopers India, these initiatives are now bearing fruits and the public projects that had come to a standstill are once again back on the right track. "Government intentions have translated into reality," says Agarwal, thanks to initiatives such as setting up of strict deadlines, revising contract norms and delegating the authority swiftly for nimbleness.
Things are finally starting to look up
Government efforts to solve the bad debt burden will help the advent of private investors in infra sector, says Agarwal. Manish Agarwal, PricewaterhouseCoopers India, believes that the government is now eyeing an "increase in public spending, completion of stalled projects rather than the announcement of new projects, the resolution of private stalled projects and bringing new projects into the market for private investment."
