Infrastructure Sector and the Challenges That Its Facing

Panel 1: Infrastructure sector and the challenges that its facing

Points discussed:

Expectations from budget

Challenges that finance minister is likely to face

Will you be smiling or crying on Feb 1

Trade deficit is widening

Holding the fiscat deficit together

GST challenge

Global economy is showing synchronized good times but growth rate of 7% for India is underperformance relative to its potential.

Macro factors are adverse in the Indian economy like fiscal situation, trade deficit, oil prices, inflation, interest rate especially G-Sec yields. So we need to deal with this challenge.

Micro situation seems better especially stock market.

Priority area of budget should be-

1. Jobs
2. Agri/ rural economy
3. Reviving private investment
4. Exports
5. Issue about inequality

Government does not have too much money to put into infrastructure due to issues like rising crude oil prices, infialtion etc.

There is not much private investment in infra sector.

Government has been supporting infrastructure and people are looking at budgetary support from govt.

Government should corporatize many entities like the National Highways, Railways etc which can help government to garner fresh money through the market.

India has lot of potential which should be brought out. World economy started recovering which is a great opportunity for India. Monetary policy is getting tightened which means liquidity is getting tightened.

Exports are not increasing, imports are going up. There are so many taxes even after GST which is applicable to exporter that is not getting reimbursed in the form of duty drawback.

Structural competencies should be encouraged. Imports should be discouraged were local capacity is available.

Household sector investments should be revived.

Infrastructure has been one of the attractive asset classes in the past few years.

Trucks are becoming larger so there is more shift for bigger vehicles. Thus sales are increasing. Also there is strict implementation of overloading which is also increasing sales.

Rural to urban migration is high in India due to health and education facilities. If employment opportunities are created in rural areas and health and education facilities are made available migration will decrease which would put less pressure on urban infrastructure.

If government promises something they should be able to deliver it.

Government is taking fresh loans to pay old loans which is not a good situation.

Govt should cut its own cost. Increase in deficit should only be for capital investment.

Government should look at asset recycling.

Government size and government expenditure should be reduced.

Panel 2: Banking Sector

Fintech and banks are competing. Old style of banking is under threat. Govt has given focus on digital initiatives.

NPA causes loss to a bank. Wilful defaulters leads to NPAs.

Govt will not allow willful defaulters to participate in a bid.

Someone who can sustain the corporation for long is the right bid not the one who has given the highest bid.

DRT and SARFAESI were not really effective. But IBC is bringing the creditor in possession and debtor in possession on one table.  

Underlying concern should be looked at as a going concern and thus the case should be resolved rather than liquidated. Resolution should be focus. It should be discreet.

Responsible and sustainable financial inclusion is very important.

Only 8% of Indian population is covered by micro finance sector.

Effective good credit insurance mechanism is important which is not available today.

Payments bank cannot lend so not much regulations are followed.

Any differentiated bank is a technology company first and a bank later.

Demonetisation has put a thought into rural areas that they have to put money into a bank.

Demonetisation and GST has led people to hope in the Fintech world.

Infrastructure is not there to promote digital services.

We should move away from the concept of zero charge to customers.

Government is in the process of recapitalising banks.

Behavior of borrower has changed post IBC.

Banks will take the right decisions given the right kind of proposals and for that a relevant ecosystem along with capitalization, IBC etc is now getting created.

Banks should play different niche roles rather than competing with each other.

Most cases involve hard assets and as it takes time more time to resolve, with each passing day the value of asset is decreasing/ depleting.

Waiver of charges does not matter. Instead an ecosystem should be created with Aadhar framework.

In micro finance there should be no intervention, it should be open to market forces.

Clear bucket for investment in each sector should be specified.

Wherever there is digital, duplication has to be removed.

ATM is a dying business. This can be done by micro ATM at 1/10th the cost. It will create employment also.

Focus of government should be to remove cash from the system. People should be able to get money in digital form.

Allowing banks to fund domestic funds apart from foreign funds is important.