See double-digit growth in infra sector ahead: CMIE

Below is the verbatim transcript of Mahesh Vyas's interview with Reema Tendulkar and Sonia Shenoy on CNBC-TV18.Sonia: When we spoke to you last month, you had indicated that the stalling of projects have declined and this is a positive indication. Also, projects worth of about 2 crore have been revived. However, it you had to give us a report card of what the last one year has looked like from the government’s execution point of view, what would your analysis be?A: The year 2014-2015 has gone quite well for the infrastructure sector and we have seen progress on many fronts. On the policy front, we have seen coal blocks being auctioned successfully.

Also, after a lot of delay and anxiety, we have seen hike in gas prices. There has been progress on other small things such as the minerals bill, which was cleared and has far reaching impacts. we saw Diesal getting controlled and de- controlled, direct benefits transfer ( DBT) on Liquified petroleum gas (LPG).

You can see that the impact of subsidy delivery has now become more effective. So I think there has been substantial progress on the infrastrucutre front.The impact of this on growth in the infrastructure sector is also quite clear. So there  has been a substantial increase in coal production and in thermal power generation.

Reema: When we spoke to you last time, you had indicated that new investments have sequentially dropped in the March quarter as compared to the December and September quarter. What are the early signs for the June quarter with respect to new investments?A: It takes time to get an idea about the trend. So I do not think I am in a position to comment on the June quarter.Sonia: Coming back to the point you made about the year being good for the infrastructure sector. We had a talk with the Managing Director of Motilal Oswal Securities a while back and he said that a lot of positive statements are being made with respect to planning. For example, Nitin Gadkari said that 3 lakh crore of road projects are being planned in the next six months but unfortunately when it comes to execution of these projects, there seems to be many road blocks. What in your mind are the key problems because of which execution is not taking place and what do you think the government needs to do to speed up the process?A: The first thing we need to do is to lower our expectations of faster completion of projects. I do not think we are a country where we can expect a very rapid implementation particularly when it includes issues like that of land acquisition. So when it comes to road development for example, land acquisition is an important thing and I do not think one can merely go out and acquire land and there are many such things in a country like ours, which is densely populated in many areas and there are many institutions involved.The second important point is that there is progress and I see in infrastructure, there is an excellent continuity caused by a wonderful constitutional framework. Honestly speaking, these are not the outcome of the Modi effect but due to the continuity in this sector.It is Just like 1991 reforms which was a continuation of what began in 1987. so what we should applaud is the continuity and this continuity is towards better growth and  progress. If we raise our expectations too high, we will be dismayed by that.

So I think the limitations that we have on the speed of growth are reducing as we see many efforts being taken up by the government and the Supreme Court (SC) and all other institutions to ensure that implementation picks up.

However, there are problems, For example, one cannot do away with environment clearances and these are sometimes viewed as hurdles eventhough they are not. Environment clearnace is a way of protecting our environment.So many times we get confused that we cannot invest due to its effect on environment.So when we have to take care of all the constituencies then we need to think before we move ahead.

Reema: Based on your continuity of policies, what are the realistic expectations that one should have for FY16 with respect to infrastructure and power sector in terms of new projects and reviving stalled projects?A: There has been progress, like I told you that coal production has already increased. We saw an 8 percent or more than 8 percent increase in coal production. We saw more than 8 or nearly 10 percent growth in thermal power generation. I think going forward, I expect this to only accelerate. I expect more things to get debottlenecked and I think we should expect close to double digit growth in all infrastructure sectors.

Currently, the only problem is the stagnant crude oil production but I expect this to not become double digit and at least improve. So, as far as sectors like coal, power, port traffic, air traffic are concerned, I expect reasonably good double digit growth rate.Sonia: When we were talking about the new investment proposals in the January to March quarter, you had indicated that a big chunk of it had come from Gujarat where the annual Vibrant Summit was held but can you give us a sense of improvements taking place according to the different geographies and also what are you noticing in terms of improvement or where are you noticing improvement?A: There was a concentration of new investment projects announced in the March quarter. If you look at 2014-2015 as a whole, many states have seen substantial increase in new investment projects. So March was a little skew but that was only about one quarter and at same time I also highlighted that there is some worry about this concentration with respect to the September quarter and the geography in the March quarter. However, that I would say is just an observation and I do not think one can draw a very heavy inference from that, one needs to be little more patient and take a longer-term view.

If you look at the period of 2014-2015, almost all the major states have seen an increase in new investment proposals. So there are no winners or losers in 2014-2015 and it is quite widespread if you look at 2014-2015 as a whole.