The finance ministry will soon compile a list of large infrastructure projects that are stuck due to regulatory hurdles. The list will be presented to finance minister P Chidambaram who will chalk out an action plan to remove the impediments blocking these investments.
After an inter-ministerial meeting with the infrastructure ministries anchored by the finance ministry on Thursday, senior officials told FE that big projects of shipping, mining and coal sector were discussed in the meeting chaired by department of economic affairs secretary Arvind Mayaram. An official said, ?So far the data collected by the finance ministry show environmental procedural delays are the main reason. Once all ministries provide the data, an credible action plan will be formulated.?
Soon after taking charge, Chidambaram had asked the ministry to work out plans to push the stalled investment in key infrastructure sectors like coal, roads, oil and natural gas, telecom, railways.
Thursday?s meeting also took stock of the progress made after the first such meeting held by Mayaram and financial services secretary DK Mittal earlier this month with officials from the infrastructure ministries to expedite public private partnership projects costing over R1,000 crore.
Administrative ministries have been asked to compile a list of projects stalled due to regulatory hurdles mainly environmental procedures and land acquisitions. As per the data complied by Centre for Monitoring Indian Economy, uncertainty over environmental clearances, land acquisition and financing have stalled R4.9 lakh crore worth of projects in 2011-12. Out of the top 20 projects which account for 59% of the total cost of projects shelved, 10 projects worth R1.6 lakh crore were shelved only because of land acquisition and environmental issues.
Finance minister P Chidambaram had recently said that he intended to identify the problems that impede higher production in coal, mining, petroleum, power and the slow progress in road transport, railway and port sector projects. Separately, the department of financial services (DFS) will be monitoring projects with an investment of R1,000 crore and above in the private sector.
A senior government official said, ?Some 112 projects have got stalled due to various constraints where banks that approved loans are yet to disburse funds.? Majority of these projects are from power and road sectors. DFS has sought data from banks and promoters on the bottlenecks causing delay. The department has also issued advertisements in newspapers for promoters of these projects to provide details. FM is holding a meeting on September 7 with the infrastructure ministries to discuss these projects.
The ministry will set up a web tracking system by September, wherein financial institutions, banks and promoters can provide details of projects and related issues.
This will be part of Investment Tracking System set up by Prime Minister Manmohan Singh after the Central Statistics Office (CSO) brought to the fore the worrisome situation of slowdown in investments. For the first time since 2004-05, the investment rate, gross fixed capital formation, fell below 30% to touch 29.5% for 2011-12. New investment announcements declined to a six-year low of R10.6 lakh crore in 2011-12 from R23 lakh crore registered for 2008-09.
Uncertainty over land acquisition has been one the key factors for infrastructure projects becoming financially non- viable. M Murli, director-general, National Highway Builders Association, said, ?Acquiring land is the biggest challenge faced by road sector as the partial availability or no availability of land at the time of commissioning increases the cost of funds. Banks force builders to reschedule their loans leading to higher cost
of borrowing. Once the projects become unviable getting approvals become even more difficult.?
