RE:I have a question
by chanakya maurya on Feb 07, 2007 01:54 PM Permalink
Govt. corpus private parties together, who are 2 ultimately benefit substantially, must invest in infrastructure.
Today's media is clear about Manmohan surmising that private parties are lukewarm to the idea.
It is a very commendable idea- Infrastructure finacing needs an Indian solution and formula replication of what has worked in the West may not always work. While the role of the private sector is talked about substantially, it has to be the government which has to play the role of the sponsor and the principal investor. It is true that pension funds and infrastructure assets are well matched for their return timelines but there is perhaps also a role for utilising the FDI corpus. A combination of FDI corpus and Pension Fund money is perhaps the best solution in my view. What is really important though is the role of the government in designing appropriate commercial structures that incentivises infrastructure investment and capital efficiency. The private sector as a minority contributor and implementor in a PPP style transaction design is also worth considering. As for the AITUC wanting to manage such a fund, I have a simple question: "What is the AITUC track record in managing such sums? Why should the ordinary pension fund contributor believe that AITUC is the best qualified entity to manage his/her money"?
This issue is really worth a debate. Ashutosh Shastri Director, EnerStrat Consulting London, England
I guess this is an excllent idea.. Considering the fact that the EPF proceeds are huge and that investments into stock markets is a risky investment, the idea of diverting the funds to infrastructure devlopment will do a world of good. There are two reasons as to why this will succeed.
1. infra development in India lacks funds ans we are still way behind other developed and developing countries in terms of infra growth. The PF proceeds will bring the added impetus to this growth. This will ensure that the Govt does not think about financing details for such a development but instead divert its thinksing as to how to make such a developement more profitable.
2. Investing in infra projects would ensure that the Government earns more than what it pays. Since viability of an infrastructure project is only possible when Net Present Value or NPV>prevailing Interest Rates. Thus the there wld b no pressure on the Govt to pay the mimimum interest on the EPF Suurplus...
If this idea is implemented, it would not only solve 2 problems in ine go but would also probably change the face of the Country.
First time out of box thinking...Does not matter it comes from left or right....i think this is a very good proposal and should go through its outcome.
