India needs to have more ambition and clarity on what the country aims to achieve through specific infrastructure projects to drive more investments into the sector, according to Hindustan Construction Co Ltd.’s Ajit Gulabchand.
While spending on infrastructure projects has increased in general, private investment is still lagging, Gulabchand told BloombergQuint’s Menaka Doshi on the sidelines of the World Economic Forum at Davos.
To spur private spending, the government needs to create policies both at the central and state levels on “what is the new system for moving people and goods around the country efficiently”, said the chairman and managing director of HCC. “Based on that, you might have a different answer on how you build roads.”
The disruption from the implementation of the Goods and Services Tax may continue in 2018 as well, Gulabchand cautioned, adding that things may stabilise as the year progresses. Besides, high oil prices and interest rates will continue to keep businesses wary, he said.
I think this year will also be a troublesome year and people will talk about green shoots. Green shoots are confirmed only a few days later when there are many more around. Till then, green shoots are in the eyes of the optimist.Ajit Gulabchand, CMD, HCC
The other disruption, according to Gulabchand, has come from the Insolvency and Bankruptcy Code. The Reserve Bank of India, last year, released two separate lists of potential defaulters against which lenders could initiate insolvency proceedings at the National Company Law Tribunal.
The new law has prompted banks to take companies to the bankruptcy court “not because that it is a necessary solution but because they want somebody else to decide on haircuts,” Gulabchand said.
We have to understand the fear of the bank. If we can address that, then there could be more sensibility in what could go into bankruptcy and what should be resolved without bankruptcy.Ajit Gulabchand, CMD, HCC
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