 "Govt reviewing norms to boost infra investment: Sinha")
Jayant Sinha, minister of state for finance, in his address at the India Invest Summit 2016 to sovereign wealth funds, private equity and pension funds, said the government would provide a rules-based, policy driven, non-discretionary style of governance so that there would be no ambiguity in interpretation.
“We are working hard to understand what the issues and challenges are,” Sinha added. Seeking more private investment in ongoing infrastructure projects worth $100-150 billion, he asked investors to consider expansion of existing projects (brownfield), along with new projects (greenfield) as National Investment and Infrastructure Fund (NIIF) would also fund stressed assets. He said there were investment opportunities in highways, railways and energy sectors.
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“We are going through a process where these projects are being reassessed, new financing coming in... For these projects, there will be attractive investment opportunities as the capital structure is reset,” he added.
Sinha said the government was trying to rethink the whole manner of refinancing greenfield projects to help these projects realise cash flow as early as possible.
“A number of funds like Apollo, Blackstone, and Edelweiss are looking at these brownfield stalled projects,” he said.
The government had set up the Rs 40,000-crore NIIF in December last year, with a 49 per cent stake. The remaining 51 per cent would be held by private investors.
Reserve Bank of India (RBI) Deputy Governor H R Khan said the central bank would relax its guidelines to encourage investments. He added the focus was to bring more long-term players in the infrastructure sector.
“We are open to regulatory changes as the situation demands; nothing is cast in stone. We are sensitive to demand,” said Khan.
RBI has announced several steps in the past few months including with regard to external commercial borrowings (ECBs).
The banking regulator had relaxed ECB norms with fewer restrictions on end use and allowed loans from sovereign wealth funds, pension funds, and insurers to attract more overseas fund.
According to chief economic adviser Arvind Subramanian, increasing public and private investment is a key priority for the government, adding it is the right time for infrastructure firms to make investments to benefit from lower commodity costs. “Although it is a challenging time, it is a kind of positive shock for investing in infrastructure. If oil, steel, cement, and commodity are down, cost of building infrastructure comes down and returns to infrastructure goes up,” said Subramanian.
According to him, while international environment had become very challenging, India continues to be a haven for stability with strong macro fundamentals including narrowing current account and fiscal deficits, and low inflation. “In a sense, there is a big opportunity for India because of our emphasis (on infrastructure) and international environment, which increases returns in general and infrastructure in particular,” Subramanian noted.