The Union Budget 2016, presented by Finance Ministry, has been done with last month and the hard work begins now.
If there was one thing that the Narendra Modi government was voted in into power for, it was the hope that it would boost the country's creaky infrastructure.
In order to gain a better understanding of what the government is doing in this regard, CNBC-TV18 and Mint got together five bureaucrats who form the team that aims to upgrade the country's infrastructure sector.
In a panel discussion moderated by CNBC-TV18's Shereen Bhan and Mint's Anil Padmanabhan, Economic Affairs Secretary Shaktikanta Das, Coal Secretary Anil Swarup, Telecom Secretary JS Deepak, Steel Secretary Aruna Sundarajan and NHAI Chairman Raghav Chandra discussed the government's achievement with respect to the infrastructure sector and provide insights into what one can expect going forward.
The secretaries were then grilled by an elite panel comprising India Inc chieftains.
Key highlights of the discussion:
Shaktikanta Das:
- Budget has allocated Rs 2.21 lakh crore towards infrastructure. This will be enough to kickstart public investment in infrastructure in the face of the slowdown in private sector investment and NPA problem.
- Sticking to fiscal deficit will lead to bond yields reducing. Will lower cost of borrowing.
- National Investment and Infrastructure Fund has been set up; committee to shortlist CEO candidates will meet in a fortnight.
- Not aware of any thinking to roll back decision to cut interest rate on small savings scheme. Public should look at real rate of return and not nominal: 8.1 percent in times of 5.5 percent inflation is better than 8.8 percent during 10 percent inflation.
- Key aspects for Kelkar committee report on infrastructure -- such as contract renegotiation and dispute resolution -- already incorporated in Budget.
- Hope to table Dispute Resolution Bill in Parliament during second half of Budget session.
Anil Swarup:
- Coal production has increased; no power plant is facing critical shortage of coal; will save Rs 24,000 crore by way of cut in imports bill.
- No considering any bailout package for stressed companies that bid high during coal auctions. There are problem with only some [auctioned] blocks; we are focusing on the rest.
- Need to do a lot of work with respect to quality of coal produced by Coal India.
- Fourth round of coal auction had to be called off due to lack of demand.
- Will think about bringing in private sector in coal mining once demand improves. Groundwork by way of regulation has already been laid by way of amendments to Coal Nationalization Act.
- Government's UDAY scheme to turn around ailing state electricity distribution companies will drive the economy
JS Deepak:
- Fragmentation and availability of spectrum has been a challenge; upcoming spectrum shortage will end all shortage questions once and for all. All bands from 700 Mhz to 2500 Mhz will be auctioned.
- Special audit requested by Department of Telecom not a new move; we have been doing audit on telcos books for long; this is not increasing burden of regulation
- Can't comment on TRAI's decision on call drops; matter is remit of regulator and will be decided by courts.
- On the cusp of far-reaching reforms for telecom companies. Will announce framework for virtual network operator within weeks; will also announce new policy for right-of-way rules for laying underground fibre and installing mobile network towers. Talking to states and municipalities. Policy should be out by April. Permissions will be made time-bound and failure to give permissions within timeframe will be deemed as given.
Aruna Sundararajan
- Minimum import price was the biggest support the sector was seeking. Already seeing its impact in sentiment and prices
- Sector has faced problem of overinvestment and lack of demand rather than mismanagement. Cos are over-leveraged but problem will have to be solved by market and by mutual decision by banks and companies themselves.
- Still, we are looking at another financial package for steel sector. Contours not decided yet but several options such as debt-for-equity swap or bringing in international investors on the table. Should announce something in two months.
- Government's infra push to boost demand for steel.
Raghav Chandra:
- Lots of expectation that government needs to deliver good quality roads. NHAI itself is in process of transformation.
- Will hit the market soon for Rs 15000 crore NHAI bonds.
- Expect to award 25 percent more this year. Greater emphasis is on expressways and making highway sector more service oriented. Will focus on things like highway monitoring, traffic management; hospitality, safety etc.
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