Meeting held after the cabinet clears hybrid mode of financing road building
GN Bureau | January 28, 2016
In a bid to remove roadblocks and resolve contentious issues that are stalling highway projects in the country, union finance minister Arun Jaitley and transport minister Nitin Gadkari today held a meeting with the bankers, contractors and the builders.
Jaitley and Gadkari agreed to make changes in the mandatory model concession agreement between the banks and borrowers to simplify the loan approvals.
Stressing that the growth in transport sector will have spiral effect on all sectors, Jaitley asked the bankers and contractors to expedite the pending projects as early as possible.
“We have simplified the procedures, made alternative options of flexibilities available for bankers, contractors. We are hoping to award 10,000 Km of highways by march”, said Jaitley.
The meeting came a day after prime minister Narendra Modi chaired a cabinet meeting taking the stock of the progress of key infra projects. Nearly 421 national highway projects are delayed due to cost escalation and disputes between bankers and concessionaires.
Both the ministers spoke about recent cabinet decisions where the government has decided to fund 40% of project cost of high way projects bid on PPP mode. On Wednesday, the cabinet had approved yybrid annuity model for implementing the highway projects bid on PPP mode.
Under this model, the PPP mode projects will receive 40% of project cost from the government to the concessionaire or contractor. Remaining 60% has to be arranged in form of debt and equity.
Gadkari had told a news agency that his ministry is seeking a record Rs 700 billion ($10.3 billion) in government spending to boost road construction and spur economic growth.
In addition to a more than 50 percent increase in budgetary allocations in the fiscal year starting April, Nitin Gadkari said that his ministry is also looking to borrow overseas. The overall target is Rs 5 trillion road projects over the next three years, he said.
"The policy of our government is giving more priority for development of infrastructure," Gadkari, 58, said in New Delhi on Tuesday. "There is no problem of investments, no problem of money. We only need to fast track our decision-making process."
The transport ministry is also considering options for overseas loans, according to Gadkari. While interest rates may be attractive, the challenge is to find solutions for foreign- exchange hedging costs, Gadkari said.
Gadkari aims to build 100 kilometers of roads a day, up from about 18 kilometers currently. A new funding model is expected to speed things up -- the government will pay an annuity to the successful bidder for a project to cut financial risks. The road ministry has received bids for eight projects under the plan, and will seek offers for another 27 before March, the minister said.
Gadkari's targets are ambitious. In the year through March 2015, India built 4,410 kilometers (2,740 miles) of highways, compared with the goal of 6,300 kilometers.
One year has passed since the Modi regime applied shock therapy to improve the functioning of the Indian economy through demonetisation on November 8, 2016. Thus, legal tender to rupee notes worth 1,000 and 500 denominations was withdrawn and 86 percent of the currency went out of circulation. It was claim
In a bid to meet the increase in electricity demand of Jammu & Kashmir during the winters, the centre has decided to allocate an additional 792 Megawatts to the state. The allocation of power to J&K from central generating stations (CGS) is 2,397 MW. The supply would be given by powe
Minister for petroleum and natural gas, skill development & entrepreneurship Dharmendra Pradhan has lauded the state run Indian Oil Corporation and IDCO (Industrial Development Corporation of Odisha) for signing a pact to establish a plastic park at Paradip in Odisha. Pradhan was speakin
An efficient monetary transmission is a sine qua non for the successful pursuit of its objectives by any central bank. Over the past two decades, it has been the endeavour of the Reserve Bank of India to strengthen the monetary transmission process, but these efforts have yet not yielded the desired result
The cabinet has approved the proposal for deputation of group A officers of department of telecommunications (DoT) and other ministries with telecommunication and information technology background to Telecommunications Consultants India Ltd. (TCIL). TCIL, a Miniratna PSU, is a premier telec
When it comes to dealing with the disputed border regions of Jammu and Kashmir, the Indian public favours an aggressive stance, said the Pew Research Center, a US based think-tank. A 63% majority believes the government should be using more military force. Few say India should use less force