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CII outlines 5 key measures for boosting infrastructure development

High interest rates and the credit crunch have delayed Infrastructure projects by six months and more, revealed CII Infrastructure Outlook Survey. The CII survey revealed that 83% of the respondents expects Government to increase its proposed spending on infrastructure by additional 15% or more to stimulate necessary demand in the economy.  Of these, 32% of the respondents strongly feel that Government's additional spending on infrastructure must be more than 15% during the period January-June, 2009.

About 85% of the Infrastructure and related companies surveyed expressed concern over delay in financial closure of infrastructure projects implemented by them. Of these CEOs and operational heads who revealed their concerns, 50% of them said that delays in financial closures was upto 6 months and another 35% of them revealed that the delays were more than 6 months.

Cost-overrun of infrastructure companies under implementation, as reported by 82% of the respondents, was 5% or more. About 32% of them revealed that project costs has gone up by 10-15% and another 18% of them revealed that project costs had gone up by more than 15%, the CII survey said.

The CII survey expressed the need for the Government to direct the suggested increased spending into Roads & highways, Low cost housing, Power and Ports. About 81% of the CEOs accorded highest priority to Road and Highways and low cost housing for directing the suggested additional Government spending. "This additional Government spending on Roads and low cost housing will provide the much needed boost to domestic demand for sectors such as steel, cement and other industry sectors. Further, such projects are also large employment generators", said Chandrajit Banerjee, Director General, CII.

The infrastructure companies surveyed suggested the following measures by the Government to deal with the current situation emanating from Global financial and economic crisis. About 84% of the CII survey respondents prioritised the following key measures by the Government.

• Lower interest rates for Infrastructure projects, especially PPP Infrastructure projects.
• Create a special fund of US $ 5-10 billion to create a crowding-in effect for funding Infrastructure projects.
• Simplification of rules, regulations and procedures of according clearances for infrastructure projects.
• Allow large private infrastructure companies to float tax free bonds.
• Facilitate implementation of infrastructure by setting up a high power implementation and facilitation agency.

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