Infrastructure Spending Must Not Be Limited To Roads, Says Market Veteran Vinayak Chatterjee
Vehicles travel along a mountain road near the Nathula Pass, an open trading post in the Himalayas between India and China, in Sikkim, India, (Photographer: Prashanth Vishwanathan/Bloomberg)

Infrastructure Spending Must Not Be Limited To Roads, Says Market Veteran Vinayak Chatterjee

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At a time the Prime Minister’s Office’s called the road infrastructure “financially unviable”, market veteran Vinayak Chatterjee said India’s infrastructure spending must not be limited to only roads and should also look at water, railways, and public-private partnerships.

“Most discussions on infrastructure ultimately converge on the road sector. The government is working on a very large blueprint on water, with the new Jal Shakti Ministry. Insiders from the Jal Shakti Ministry say they are burning the midnight oil to create a slew of investment options and expenditure on several water projects, from irrigation to Nal Se Jal,” the chairman at Feedback Infra Pvt. told BloombergQuint during an interaction. Besides water, railways will have a healthy order book.

The Prime Minister’s Office said the National Highways Authority of India is “totally log jammed with unplanned and excessive expansion of roads”. The PMO also called for stopping construction and sale of assets. That left analysts surprised who said the move may lead to sluggishness in overall order inflows.

Still, Chatterjee said that’s not a reason for alarm. The order book for construction companies has grown over the years and that would cushion them for a three to four-month hiatus, he said.

Also, the market shouldn’t overreact to the letter as it only signals a positive dialogue that involves taking a break to reassess the strategy before going forward, Chatterjee said. Nitin Gadkari was already pushing for more financing in his second term as Minister of Road Transport and Highways by reopening the build-operate-transfer mode of constructing roads, he said.

Other Key Takeaways

  • India could emulate Indonesia’s plan to move its capital city to a neighbouring island or outside of the country altogether to combat congestion.
  • The RBI’s recent stimulus has eased off the fiscal space and quelled fears that the government may not be able to implement projects under public expenditure.
  • Analysts, economists, and business leaders still feel that it may be worthwhile for the finance minister to consider a relaxation of the fiscal deficit by up to two points to facilitate greater asset creation and nation building.
  • The finance minister’s four “mood enhancers” for the infrastructure sector are welcome, but it will “jump in joy” only when the announcements translate into real-time action on the ground.

Watch the interview here:

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