Finance Ministry appeals India Inc to support infra projects

Written by ENS Economic Bureau | New Delhi | Updated: Apr 30 2013, 14:15pm hrs
Arvind MayaramGovernment cannot bailout projects that fail due to commercial reasons, Arvind Mayaram says. (Reuters)
Highlighting the need for easier exit norms for private sector developers, the finance ministry has called for setting up of facility management companies that can take over the operation and maintenance of completed projects.

Such firms can step in from the equity side when the projects have been developed. This would help construction companies that have over stretched order books to focus on other projects, said Arvind Mayaram, secretary, department of economic affairs.

Addressing a conference organised by Ficci, Mayaram asked India Inc to help set up such firms as it would help build capacity in the private sector for infrastructure projects.

He also made a case for strong independent regulatory authorities that would aid capacity building in the government and also promote public private partnership projects in sectors like coal, road and rail.

We do not have adequate number of independent regulators. Their terms of reference are not properly defined to meet all the challenges that the sectors are facing, he said, adding that the regulatory authorities have to be empowered to deal with the issues which are arising in their sectors.

Exuding confidence that the proposed coal regulator would be set up this year, Mayaram said that some more sectoral regulators would also be set up during the course of this year. Budget 2013-14 has proposed formation of a new regulator for road sector and in the Rail Budget there has been an announcement for tariff regulator.

Referring to the problems being faced by PPP projects, Mayaram said the government cannot bailout projects that fail due to commercial reasons. However, he added that the government should step in if the failures are on account of regulatory hurdles.

We need to make distinctions between these two. Wherever there is commercial failure, the private sector must take the hit. Wherever there is a regulatory failure government must step in, Mayaram said.