Public investments must lead the way during global slowdown: Jaitley

Finance Minister Arun Jaitley on Tuesday said that public investments must lead the way during global slowdown and that India has an opportunity to spend more on infrastructure thanks to low oil, commodities and mineral prices.

“If you look back a few years ago, some of our infrastructure segments had slowed down. I find that the opportunity provided by low oil prices has enabled the government to channelise a large part of our savings into several areas of infrastructure. Last year, we gave a push in that direction, a push that we intend to continue,” Mr. Jaitley said.

Stressing that there would be ‘no easy day’ in a world economy that is passing through a phase of great volatility, the Finance Minister said it is up to India to take advantage of such challenging trends.

“This is providing us with some form of an opportunity. But we must have the intellectual honesty to analyse our shortcomings and failings so we are in a position to improve them,” Mr. Jaitley said, stressing that though infrastructure investments take time to reflect on the ground, they would have a big positive impact on the economy in the years to come.

Referring to the lack of impetus in private sector investments, Mr. Jaitley there are some signs of pick-up in the infrastructure sector, with private players rekindling interest in roads and ports projects.

“World over, the experience has been, that when the going is tough, state institutions have to take the lead. When the going is good, the private sector also has an important role to play,” Mr. Jaitley said, adding that the resources deployed by the government in National Highways, rural roads and Railways have begun to show a visible change.

“In the last one year, a lot of stalled highway projects have now got moving. As a result of enhanced public investment, even private sector players who had been bogged down with disputes with the highway authority have now re-entered the fray,” he said.

Stressing that the government will continue to ramp up investments in infrastructure, the Minister conceded that funding infrastructure projects remains a big challenge and the government is optimistic of partnering with sovereign wealth funds and pension funds that have evinced interest in the recently launched National Investment and Infrastructure Fund.

“Conventionally, in the initial years of our economic management, infrastructure has been resource-starved. Because we have been starved of resources, we have been struggling to find instruments and methodologies of funding.”

He also made an assessment of the different infrastructure sectors such as the Railways, which he said is on the right track but needs to expedite its forward movement.

“The Railways, at least directionally is on the right track. Foreign direct investment has been allowed and announced by GE and Alstom for two large manufacturing projects in Bihar. The ministry will soon come out with proposed bids for redeveloping 400 stations,” the Minister said. The Railways also intends to mobilise international investments and raise funds through tax-free bonds, he said.

Private sector investors, the Finance Minister said, is keen on investing in ports, but called for corporatising major port trusts which face the real risk of being overtaken by ‘so-called minor ports’ in terms of cargo traffic.

In airports, the government’s focus is on improving managerial efficiency as investments have already been made to spruce up a large number of mid-level and smaller airports. “These can no longer be considered Greenfield or brownfield projects, so the aviation ministry is considering a proposal to bring in management participation [from the private sector],” Mr. Jaitley said.