Narendra Modi government is looking at ways to de-stress the infrastructure sector and as a step in that direction plans to speed-up the payments to infra companies. According to a CNBC-TV 18 report, the government has asked NITI Aayog to prepare a Cabinet note on this. “The note will tell the various infrastructure ministries, urban development, roads ministry that if there is a payment due to a private sector company for some project constructed earlier, which has gone into arbitration, and the arbitrator has awarded in favour of the company, the payment should be made on priority,” the channel reported. “At the moment even if it is a unanimous arbitration award, government’s department secretaries go for an appeal out of fear that the CAG or the CVC will point out that they did not safeguard the government’s interests adequately,” the channel added.
The NITI Aayog-composed Cabinet note is expected to say that in the case of unanimous arbitration, appeals are not required. In exceptional cases, the appeal should be made only after a special approval from the secretaries concerned, as well as committee that will include a CVC or a CAG member. The idea behind this is to expedite payments. This would mean that around Rs 30,000 crore which is already arbitrated will flow quickly. According to the channel, Rs 70,000 crore is stuck in arbitration and the total stress in the sector is Rs 1.65 lakh crore.
The decision to speed-up payments to infrastructure companies is a result of a PMO meeting, which the report said, was well attended by the concerned ministries, infrastructure honchos, bankers and the representatives of the PMO. PM Narendra Modi recently reviewed the progress of key infrastructure sectors. According to the PMO release, “In course of the presentation made by NITI Aayog, it was noted that there has been phenomenal progress in several key sectors, including renewable energy, and railways.”