The Finance Minister, Arun Jaitley, on Tuesday said that public investments would continue to "remain stepped up" in the Indian economy, which has emerged as a stable force in the midst of global slowdown.
"Public investments were stepped up last year. It will continue to remain stepped up," Jaitley said in his address at an event here to mark the 10th anniversary of India Infrastructure Finance Company Ltd (IIFCL).
Jaitley said that the Government has clearly recognised that public investments have to "lead the way" when "you face global slowdown".
In the months ahead, the Centre will be "seriously investing" in infrastructure, Jaitley added.
Low oil prices
Jaitley highlighted that the opportunity provided by low oil prices has enabled the Government to channelise a large part of savings in that sector (oil) to several areas of infrastructure.
“Last year we made a push in the direction of spending more on infrastructure – a push that we intend to continue. Lot of resources were put in direction on national highways, rural roads and railways,” he added.
Jaitley also said that stalled projects in highways have now started moving. As a result of enhanced investments, even private sector players, who had got bogged down in their disputes with the highways authorities, have now re-entered the field.
“A positive response is clearly visible”, he said.
However, rural roads — which are an important infrastructure aspect of Indian economy — still needs much larger resources, he said.
“That’s one area where lot of distance still has to be covered,” Jaitley said.
Railways
The Finance Minister also said that railways had now come onto at least directionally the right track. The Centre is now inviting private sector, including foreign investment, in the infrastructure of Indian Railways.
“Recently, we had two major foreign investments by Alstom and GE launched in two different manufacturing areas of Bihar as far as railways was concerned. “Very shortly, railways will come up with bids for development of 400 selected railway stations in the country," he said. .
He highlighted that railways had collected money through tax-free bonds; they intend collecting international investments and LIC has made a lot of long-term capital available to them. .
"Railways is an area where they are moving on the right track, but things have to be expedited,” Jaitley said.
IIFCL's journey
Speaking on the occasion, S.B.Nayar, Chairman & Managing Director, IIFCL, said this Government-owned company had in its decade long existence sanctioned financial assistance worth Rs 90,000 crore to 450 infrastructure projects.
"We are now providing a wide spectrum of infrastructure financing solutions including take-out financing and more recently partial credit guarantee", he said.
Partial credit guarantee is a product that is expected to help channelise insurance and pension funds -- which are the main sources for infrastructure financing -- into the bond market.
IIFCL -- which launched this partial credit guarantee product in September last year -- has so far completed two transactions with this product, the latest being in December.
"Another 12 are in the pipeline and this product (partial credit guarantee) is expected to change the scenario of infrastructure financing in the country", Nayar added..