High interest rates, cash crunch delay infrastructure projects: CIIJanuary 25th, 2009 - 6:58 pm ICT by IANS
New Delhi, Jan 25 (IANS) High interest rates and credit crunch have delayed several infrastructure projects by up to six months, said a survey by the Confederation of Indian Industry (CII), released here Sunday. According to the Infrastructure Outlook Survey, around 85 percent of the respondents have expressed concern over the delay in financial closure of infrastructure projects being implemented by them.
Over 50 percent of the chief executives surveyed said their projects were getting delayed by up to six months, while nearly 35 percent said the delays were more than six months.
They expressed hope that the government would step up its proposed spending on infrastructure by additional 15 percent or more to stimulate the economy.
About 32 percent of the participants said project costs have gone up by 10-15 percent, while 18 percent said it was more than 15 percent in their projects.
Most of the CEOs said the government should increase spending on roads and highways, low-cost housing, power projects and ports.
“The 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,” CII director general Chandrajit Banerjee said.
The developers also urged the government to set up a $5-10-billion fund to finance infrastructure projects and lower interest rates to ensure smooth flow of cash.
Their other major demands are: allow large private infrastructure companies to float tax-free bonds, set up an implementation and facilitation agency and simplify rules and regulations.