COURSTEY THE ECONOMIC  TIME  EDITORIAL

Oct 20 2017 : The Economic Times (Mumbai)
Money is Fine, Where are the Projects?


The Abu Dhabi Investment Authority's investment of $1 billion in the National Investment and Infrastructure Fund (NIIF) is welcome. Professionally-managed sovereign wealth funds can supply stable, long-term funds. NIIF's aim is to pool in commitments from sophisticated long-term investors to invest both in greenfield and brownfield projects. To accelerate growth, India needs to build infrastructure, but finance has not really been an over-riding constraint. What is missing is a pipeline of sound, detailed projects that have all the relevant clearances and await only financial closure. The focus must be on producing such projects.
Clear conceptualisation, time-bound execution and comple tion of projects will bring down costs, rai se productivity and enhance competitive ness. Official clearances often delay proje cts, leading to cost and time over-runs. Po orly drafted contracts, problems in land acquisition and litigation stymie projec ts. Such projects only produces yet anoth er pile of bad debt. Ideally , the state should undertake the riskier initial stages of project implementation, aiding clearances and lowering the risk premium in project financing costs. Ownership could also bring urgency to lethargic administrations. Similarly , the power sector is constrained as politics prevents states from asking people to pay for the power that they consume. Reforms in distribution are long overdue. And states must charge consumers rational tariffs. The larger point is to alleviate the institutional shortcomings that stymie infrastructure projects.

The government has stepped up public investment in Railways and roads. But private investment is still anaemic, pulling down growth and job creation. A raft of sound infrastructure projects can change this.