Goldman Sachs believes Indian Infrastructure sector in now ready to rise from its several quarters of bad performance figures and report a strong turnaround. But is it really going to happenIJ In its research report, Goldman Sachs pointed that there are still many challenges in front of the sector but is also hopeful that going forward, the situation is expected to improve.
As per Goldman Sachs, the biggest concern for the sector is that the speeds of new projects and capex investments have slowed down considerably. The average four quarter rate of new investment this year has come down to $17 billion, which is 66 percent less than what it was last year. But now they feel things are about to turnaround for the entire sector. The report further added, “Projects where implementation has stalled seem to have flattened out over the last three quarters. With the Government reform measures and the Cabinet Committee on Investments working on fast-tracking the execution of certain infrastructure projects, we expect this number to decline going forward.” This fall in the stalled projects is the key factor for the sector, as the international brokerage house believes.
This move of the Government to put the project clearances will turn out to be positive as it will further attract more foreign investments in the sector and projects. One the projects get the necessary clearances and it would enable companies to raise funds via these projects.
But SREI Infrastructure Finance ltd CMD, Hemant Kanoria, believes all these measure will only have a short term impact on the entire infrastructure sector. While talking to The Pioneer, he stressed that the Government may be giving clearances to stalled projects but it still won’t solve the real issue the infrastructure companies are facing.
“The biggest challenge in front of the infrastructure sector is the lack of funds. Government can give clearances for some projects right now but with shortage of funds, the situation can become worse in the future,” he added.
Kanoria also stressed what the Government should really do is to make changes in the regulations. “The Government should help enable an environment wherein it is easier for the companies to raise funds to fuel capex investments and project completions.”