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CMs' no-show renders infrastructure conference a damp squib

Neena Haridas in New Delhi

The much-touted "Chief Ministers' Meet" at the International Infrastructure Development Conference (Infranet '99) turned out to be a damp squib even before it began in New Delhi today.

The Confederation of Indian Industry (Northern Region) had some embarrassing moments when the plenary session on the second day of the three-day conference saw several regrets with just Haryana Chief Minister OP Chautala turning up for the show.

Interestingly, the CII headquarters here seems to have washed its hands off the faux pas, saying "it's organised by the northern region, remember?"

The illustrious list of CMs scheduled to address the conference on public-private participation and market pricing of public goods included Ashok Gehlot (Rajasthan), Digvijay Singh (Madhya Pradesh), N Chandrababu Naidu (Andhra Pradesh), Keshubhai Patel (Gujarat) and Chautala (Haryana). But the only man who decided to show up and speak was Chautala. As one of the delegates put it, "Haryana is, after all, much closer!"

According to a chirpy little bird, there have been more regrets than acceptance letters from delegates who were invited to put the Indian infrastructure scenario in perspective!

However, this has not dampened the spirit of the rest of the delegates who made it to the plush environs of the India Habitat Centre, venue for the conference. The meet focussed on several aspects of infrastructure development in the country.

Financing and the regulatory framework -- the twin issues got a great deal of attention. Lalita Gupte, ICICI's chief operating officer, said, "Investment bankers, infrastructure project developers and the government will have to sit together and decide as to which of the projects that have been on the anvil for some time, are actually capable of achieving financial closure."

Emphasis was laid on the privitisation of the power and railways sectors, though most financial institutions were unhappy that things are not moving as fast as they ought to. Sadashiv Rao, vice-president (operations), Industrial Development Finance Corporation, said the high cost of capital was the major competitive disadvantage that was faced by the Indian infrastructure industry.

Gupte added that the rates of interest were comparable to or higher than India's only in Indonesia and Thailand. "Lack of stable and clear policy and regulatory framework combined with the risks involved in long-term financing had made obtaining finances at a reasonable rate difficult for developers." She said the answer lay in evolving more imaginative methods of financing like take-out financing."

R Srinivasan, resident director, Jardine Fleming India Securities, said it was not sufficient to keep raising infrastructure funds through American Depository Reciepts and Global Depository Receipts. But a capital market must be developed in India and infrastrucutre financing must also come from pension funds and insurance.

Abhijit Bhaumik, managing director, Feedback Ventures, said project development before projects were offered to developers was the missing link in the infrastructure project chain. "The purpose of developing a project prior to it being put out for consideration by developers was to inject a very large amount of expertise into the project in advance so that the projects had a better chance at financial closure."

The other major concern was the lack of proper regulatory framework. K P Gopalakrishnan, senior vice-president, SBI Capital Markets, said a stable regulatory environment was imperative and added that economic interests must converge to lend stability to economic environment and thus make infrastructure projects more favourable to financers.

The consensus was that government intervension is hindering smooth operations of the regulatory framework . The government must therefore take a conscious decision to distance itself from the regulatory framework.

S L Rao, chairman, the Central Electricity Regulatory Commission, said the independence of watchdogs in the country was still evolving.

He hoped that there would be fewer appeals against regulators' decisions and, as in the US and UK, mostly the courts would return them for review but not overrule them. "The present legislative framework for the electricity industry is, in fact, in some ways anti-competition."

Derek Williams, senior vice-president, Oracle, Asia Pacific Division, highlighted the importance of information technology. "Quality infrastructure combined with encouragement to the software industry and entreprenuership can turn India into an IT super power by 2008," he said. To give boost to the software industry in India, the government needs to give a ten-year tax holiday, he added.

According to Vinayak Chatterjee, chairman, Infranet and CII deputy chairman, the conference is meant to serve as an institutional platform for infrastructure industries. "Despite having Rs 600 billion available for infrastructure investment, most of it remains unutilised merely due to technical reasons. And this meet aims at finding some answers to these issues."

While Chatterjee would like to believe that this is an 'international' conference, the fact is that there were very few international names addressing the sessions.

The only foreign figures are from Malaysia because it is the partner country. Otherwise, the delegates list includes names such as S K Acharya, MD, Indian Container Leasing Corporation, Gokul Patnaik, chairman, Gokul Patnaik Associates, V Suresh, CMD, HUDCO.

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