Roads could be a one-shot panacea for many of the economy’s troubles: it creates demand for growth, jobs for the poor and a kick-up to incomes. Understandably, the government is planning a raft of measures for the road sector. Indications are that these could cheapen credit.
Road sector experts say it is imperative for the government to change the bidding norms as projects had increased capital costs and hurt investor confidence.
“Measures should be taken to categorise toll collections as tangible asset as it would help highway developers to secure more loans from banks and make financial closure easily achievable,” VD Mhaiskar, CMD, IRB Infrastructure Developers, told Hindustan Times.
He said the government should also allow developers to use external commercial borrowings to retire their costlier rupee loans.
The government plans to deepen bond markets, offer tax breaks and make it worthwhile for insurance firms to park funds in infrastructure firms like road builders.
“Also there is an urgent need to take a fresh look at the concession period which needs to be extended,” said Nabin Ballodia, director at global consulting firm KPMG.