FM unveils infra projects worth Rs 102 lakh crores

Finance minister Nirmala Sitharaman has announced that the government had identified infrastructure projects worth Rs 102 lakh crores, to help achieve the target of a USD 5 trillion economy by 2025

Finance minister Nirmala Sitharaman, on December 31, 2019, unveiled infrastructure projects worth Rs 102 lakh crores. Recalling that prime minister Narendra Modi had, in his Independence Day speech, spoken of investing Rs 100 lakh crores in infrastructure, she said that subsequently, a task force headed by the economic affairs secretary identified Rs 102 lakh crores worth of projects, after conducting 70 stakeholder consultations. The projects identified, include the Mumbai-Ahmedabad High Speed Rail. The minister said another Rs 3 lakh crores of projects would be added to this pipeline that includes Jewar Airport and Jal Jeevan Mission.

“I’m happy to say that projects are coming in and in the next couple of weeks, we will get additional projects of worth Rs 3 lakh crores. So, in all, I think we have about Rs 105 lakh crores in total of projects for the Rs 100 lakh crores commitment we made,” the minister said. The projects are spread across 22 ministries and 18 states and union territories, she said, adding the government also intends to launch a National Infrastructure Pipeline (NIP), a coordination mechanism consisting of the centre, states and also the private sector, for information dissemination together with monitoring the implementation of this entire framework. The finance minister said the projects identified are in the sectors of power, railways, urban development, digital sector, irrigation, mobility, education, health and others.

Of the Rs 102 lakh crore projects, Rs 42.7 lakh crores (43%) of the projects are under implementation, Rs 32.7 lakh crores (about 33%) worth of projects were at the conceptualisation stage and Rs 19.1 lakh crores (about 19%) worth of projects were under development, she said. Nearly Rs 25 lakh crores of energy projects have been lined up, the minister said, adding that another Rs 20 lakh crores in road and nearly Rs 14 lakh crores spending in railway projects, have been lined up. On the financing, she said, the government will look at deepening of debt market and alternative investment funds, which will provide a bulk of the debt financing necessary for this.

Reacting to the announcement, CBRE (India, middle-east, south-east Asia) CEO Anshuman Magazine said, it was clear that the government was willing to do the needful and was ready to take the initiative by providing required funds. “Infrastructure projects worth Rs 102 lakh crores for the next five years, under the National Infrastructure Pipeline, will provide opportunities to all the stakeholders engaged in areas such as urban development, renewable sector, railways, irrigation, mobility, education, health, water and digital and will pave the way for long-term development in all other areas,” he said.


Transport Ministry seeks RBI nod, for 30-year financing of infra projects

The Road Transport and Highways Ministry has sought a direction from the RBI, to permit Indian banks to finance infrastructure projects for 30 years, instead of the earlier 20 years

December 11, 2019: Union minister Nitin Gadkari, on December 10, 2019, said that he met the Reserve Bank of India (RBI) governor Shaktikanta Das in New Delhi, seeking a direction to permit Indian banks to finance infrastructure projects for 30 years, instead of 20 years. The RBI governor, he said, gave the indication that there was no problem, if banks were ready to finance for 30 years for infrastructure projects.

“Earlier, the banks used to finance only for 20 years,” Gadkari said at the inaugural session of the 10th edition of Excon-2019. Since getting bank guarantee was an issue for financing projects for such a long duration, it was agreed that projects would be insured, Gadkari said, adding that a proposal has been submitted in this regard, to the Finance Ministry.


355 infra projects showing cost overrun: Government informs Lok Sabha

As many as 355 infrastructure projects are showing cost overrun, with the overall cost overrun being Rs 3.88 lakh crores, union minister Rao Inderjit Singh has revealed

December 5, 2019: As per reports of July 2019, a total of 355 projects are showing cost overruns and the overall cost overruns is Rs 3.88 lakh crores (20.07%),” union minister Rao Inderjit Singh informed the Lok Sabha, on December 4, 2019, during Question Hour. Singh said the Ministry of Statistics and Programme Implementation monitors ongoing central sector infrastructure projects costing Rs 150 crores and above on time and cost overruns, on the basis of information provided by project implementing agencies on the online computerised monitoring system (OCMS).

Singh said the reasons for cost overruns are project-specific, depend on a variety of technical, financial and administrative factors, and differ from project to project. However, as reported by the project implementing agencies on the OCMS of this ministry, the main reasons for increase in cost of the projects are under-estimation of original cost, changes in rates of foreign exchange and statutory duties, high cost of environmental safeguards and rehabilitation measures, he said. The minister said spiralling land acquisition costs, shortage of skilled manpower and labour, changes in project scope, monopolistic pricing by vendors of equipment services, general price rise and inflation and time overruns, were a few other reasons.


Task force set up to identify infra projects for funding, from Rs 100 lakh crore government corpus

Finance minister Nirmala Sitharaman has announced the setting up of a task force that will identify infrastructure projects that deserve to get funding from the Rs 100 lakh crore corpus set aside by the government

September 11, 2019: The task force set up by the government to boost investments in infrastructure projects is in the process of identifying sectors requiring funding from the centre, shared finance minister Nirmala Sitharaman, while stressing the need to speed up spending. “Government spending has to be speeded up to boost consumption. The best spending (by the government) will be on infrastructure. We had already announced Rs 100 lakh crore as the amount in this year’s budget, which I think has to be speeded up for infrastructure-related projects”, she said. “I have appointed a task force to speedily identify the projects so that money can be front-loaded” she added.

The Minister said the task force had commenced work and was in the process of identifying those projects which would receive the funding from the Rs 100 lakh crore corpus. The task force, comprising secretaries from various ministries, other senior officials and the NITI Aayog CEO, would identify technically feasible and financially viable infrastructure projects that can be initiated in 2019-20, she said. Sitharaman said that the government, as part of its move to make India a USD 5 trillion economy, has chalked out various measures, including infrastructure spending and the merger of public sector banks, among others. She also said that the current focus would be on how to increase the GDP in the coming quarters.


RBI’s new rules on NPAs may hit infrastructure financing

Stringent criteria in the RBI’s revised framework for resolution of stressed assets, which was unveiled on February 12, 2018, are likely to deter investors from lending money to risky, long-term projects in the infrastructure sector, say experts

April 24, 2018: With the Reserve Bank of India (RBI) giving no relaxation to its February 12 framework on the resolution of stressed assets, banks are likely to become more cautious and risk-averse to long-term funding, especially to the infrastructure sector, say lenders. On February 12, 2018, the central bank had come out with a revised framework for resolution of stressed assets. The new set of rules aim at quick reporting of defaults, coming out with resolution plans for defaulting companies and time-bound referrals of defaulting firms to the National Company Law Tribunal (NCLT).

Owing to certain stringent criterion in the new framework, which includes one-day reporting of defaults, lenders have asked for some leniency but the apex bank has not granted any relaxation to its February 12, 2018 circular. “The RBI is very clear that they are not going to give any relaxation (on the February 12 framework). Now, I think, banks will become very cautious and risk-averse, particularly on the long-term funding in sectors such as power, road and ports,” said a senior banker.

See also: RBI notifies revised framework to deal with bad loans

Bankers said most of the restructuring happens in long-term projects in the infrastructure sector. For nation building, funding is required for these sectors but the risks are very high in these projects, as there are things that are beyond the capabilities of the promoters and hence, banks will be very conservative, said another banker from a large state-run bank. “The issue with long-term funding, is that in these kinds of loans, there are lots of variables like land acquisition, environment clearances or technical reasons that cannot be factored in, at the time of loan sanctioning. If a loan is for one year, then, there are less risk factors and we can visualise the kind of issues for that particular project over that period. However, if I am talking of 12 years, it is very difficult for us to visualise the issues,” the banker explained.

Under the framework, bankers will have to implement a resolution plan to revive a defaulting company, within 180 days. If the plan is not implemented within the stipulated time, the account will have to be referred to the NCLT for resolution, as per the Insolvency and Bankruptcy Code (IBC). The new plan requires approval from all the banks, in a consortium, for any resolution plan. Banks requested the RBI to make the required majority to 75 per cent for any such plan but they are yet to hear from the regulator. In the revised framework, the RBI also discontinued earlier restructuring schemes like the corporate debt restructuring (CDR), strategic debt restructuring (SDR) and scheme for sustainable structuring of stressed assets (S4A). Lenders had urged the central bank to allow these restructuring schemes for some more time but to no avail.

In a recent speech, RBI deputy governor NS Vishwanathan had defended the February 12, 2018 framework, indicating there would be no relaxation to the new set of rules. “The RBI, as a regulator, is trying to bring in discipline and will always look at it from a systemic perspective but banks will have to evaluate it (any rule) from the overall implication on their balance sheets,” said another senior banker. “Nobody has said that this (revised framework) is not doable. What banks are saying, is that they need some time, to switch over. Both, the industry and banks, have to prepare themselves for the new set of norms. This could be done in a phased manner,” the banker added.


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