[sbinews] FIs rediscover core, pump 92% more in FY02
- From: sbistcbangalore@xxxxxxxx
- To: sbinews@xxxxxxxxxxxxx
- Date: Wed, 24 Dec 2003 10:49:33 +0500
Back to basics: FIs rediscover core, pump 92% more in FY02
ARJUN RAY CHAUDHURI / ETIG
TIMES NEWS NETWORK[ WEDNESDAY, DECEMBER 24, 2003 07:57:19 AM ]
After many decades of neglect, Indian infrastructure is back in the reckoning
of policy makers. It seems that the government’s strategy to invite private
participation wherever feasible, is bearing fruit. Or, that is what a look into
the financial assistance disbursed by Indian financial institutions, who have
been the traditional financiers of infrastructure projects, seems to suggest.
FIs’ disbursement to infrastructure projects rose 91.7% to Rs 13,052 crore in
FY02 from Rs 6,808 crore in the financial year 1999. Although the amount
dispersed has apparently gone back to the 1999-levels in fiscal ’03, this is
more due to the non-availability of data from ICICI, and an increase in bank
funding.
Though investment in infrastructure was seen as subdued in FY03, considering
that ICICI’s exposure to this sector at the end of March ’03 was around Rs
15,000 crore, the actual figures are in fact higher. Infrastructure broadly
comprises electricity generation (power), telecommunications, roads, ports,
bridges, railways, urban infrastructure and food and agricultural
infrastructure.
A look at the sector-wise assistance shows that the major increase in funding
in FY03 has been in urban infrastructure. This follows the policy initiatives
undertaken by the government in this sector. The government laid emphasis on
private-public partnerships — especially for urban water supply and sanitation,
and private parties trouped in. With detailed project reports (DPR’s) for urban
mass transit systems being readied in many cities, investment in this sector is
likely to pick up further.
Assistance to electricity generation has been the most steady of all over the
last five years under consideration. Major reforms underway in the power sector
— the Electricity Act, better performance by private power distributors in
Delhi and the Prime Minister’s hydropower initiative announced in May this year
— indicate that more investment is likely to go into this sector. Funds
disbursal to the telecommunications sector had increased steadily up to FY02
(after which they slackened), while it had been erratic in the transmission and
distribution sector.
Among roads, ports, bridges and railways, majority of the investment is going
to roads. The sector has seen a decline in funding from these institutions,
down from a peak of Rs 1,759 crore in FY02. This can be partly explained by the
fact that private sector road projects have met with limited success. Traffic
volumes in private roads have been lower than estimates, and the viability of
‘toll’ road projects are being reconsidered.
A comparison of the leading institutions and their assistance to different
sectors throws up an interesting picture. Among them, LIC’s disbursals have
been pretty unusual. LIC’s distributions to the power sector have seen a steady
rise over the years, while its sudden huge disbursement to the telecom sector
in FY02 was not followed up in ’03.
While the break-up for ICICI in ’03 is not available, IDFC has a made a
presence in the urban infrastructure funding over the last three years. At Rs
264 crore, IDFC’s funding of road and port projects has seen a jump in FY03.
Also notable is the decline in IDBI assistance to the telecom sector, down from
a high of Rs 1,304 crore in FY01.
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