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He does not see any bullishness in the sector till May. But post elections, even foreign investors might be willing to invest in the infrastructure space provided some of the issues plaguing the sector – land acquisition, environmental clearances – get addressed.
Below is the verbatim transcript of RS Ramasubramaniam's interview on CNBC-TV18
Q: What is your first reaction to the fact that we are going to have a new environment minister, does this mean good news for some of the power projects, infrastructure projects which are stuck because of environmental clearances?
A: I don't think it translates into any immediate good news, in fact I would like to point out saying the same thing was said about Jairam Ramesh during his tenure as environment minister saying that he was being obstructionist in delaying clearances. I think also the timing of this just before elections, just before key meetings is also suspect.
But having said that, there is no denying that projects are being held up in the last couple of years, we have had figures of Rs 14 lakh crore down to Rs 10 lakh crore etc as being held up. So there is no denying that projects are held up, in fact GMR Infrastructure and GVK walked out of their two highway projects sighting the lack of environmental clearance. But the larger issue is, is it just about replacing a minister who is holding up decisions or is it actually about effecting some changes that the level of systems that we have for effecting these clearances.
So I don't think we should see some immediate improvements in terms of power projects being cleared or highway projects being cleared except for the fact that we have elections around the corner. So purely from that point of view some projects might get cleared. But longer term systemic improvement requires us to rethink the whole idea of clearances including saying what the environment ministry clearance board is up to and what is the project management group which actually is supposed to expedite these clearances up to, so what systemic changes can we foresee. So I don't think we should see some immediate improvement in hand.
Q: Taking the point that there are a lot of other things that we can do to expedite all infrastructure projects not just a change of guard but speaking about the limited role that can have, how do you view the appointment of Veerappa Moily to this position and what his stance will be on the way forward?
A: What I have been reading Veerappa Moily is taking an interim charge so I just think that there will be some expediting of projects, there is a whole list of some 92 odd projects which are actually now vesting with the project management group which is monitoring this. So Veerappa Moily stepping in, the sheer fact of some new energy being brought into the system, elections round the corner, I think there will be some clearances that are announced. But as I said earlier we will have to look at how to improve the entire system of clearances and the monitoring and the coordination issues thereof. So some short-term improvement should be expected.
Q: Just to take that point forward because in the oil ministry quite clearly Veerappa Moily is seen as someone who is been industry friendly and even maybe reforms friendly. So, in that case do you expect some more investments and secondly apart from environment there is still a lot of issues in terms of macros which are quite clearly hurting progress. A lot of companies are not investing in India but they are ready to invest globally; same companies which are based out of India. Do you expect that to change once we have elections and new government in place?
A: I certainly sense some green shoots in the infrastructure sector and there is a certain heightened sense of expectation from which new government comes into place. So, I am a little bullish saying post elections. I don't see any improvement till May but certainly post May, post the elections I can see some bullishness, I can see even
foreign investors coming into the infra sector provided we address some of the other concerns like land acquisition for instance, environmental clearances and the larger issue of regulatory institutional structures being addressed. So, I am a little bullish on the post election scenario.
Q: You said there are 92 projects which are up for reevaluation, could you give us some figures or numbers about how many projects are being stalled, how many on account of the environment clearances and how many in the roads, highways etc?
A: I have figures which are somewhat conflicting from about over the last six months. Six months back the figures stood at Rs 14 lakh crore projects that were stuck coming down to about Rs 10 lakh crore projects. And 92 projects was the list that was mentioned. The large bulk of which was accounted between power, highways and railways, but beyond this I don't have details of how the breakup of 92. But I think the figure of Rs 10 lakh crore that was recently quoted is about the figures that I too have from reports that have consistently come over the last six months. So by any standard it is a substantial chunk of investment that has actually been delayed because of lack of decision making.
And I think the panels that were set up to look at the environmental issues concerned have actually cleared this and my understanding is that most of these issues are now with the ministry for simple decision making in a transparent manner. So it is an uncontestable fact that there have been delays and the investment that has affected particularly in power, highways and railways I am singling these three out, are orders of magnitude, huge by any standards.
Q: Just one more word then on this gas price hike. Would you be in a camp which would believe that at least this would mean availability of gas because a lot of power projects have been announced I remember discussing it with you in the past but they don't have any input to work on; the availability of gas is an issue do you think at least some of these power projects can now look forward to higher availability of gas not in the immediate future but maybe in one or two years from hereon?
A: I certainly think so. The number of projects that are stuck because of the gas linkage should benefit by these recent developments. So, I am once again very positive that at least finally there seems to be some movement and in a timeframe of maybe two to three years some of these projects can hope to benefit. I just want to once again highlight saying that this is a sector on which almost every other sector and the economy rides. Therefore it is important that we move forward and once again I am bullish that some movement forward has happened.
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