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L&T CFO R. Shankar Raman’s Insights
In a recent interview, R. Shankar Raman, Chief Financial Officer of Larsen & Toubro Ltd (L&T), shared his insights on the trajectory of India’s infrastructure sector, drawing attention to the country’s budgetary focus and the challenges it faces. The Indian government’s commitment to infrastructure investment, as evidenced by the interim budget, has sparked confidence in L&T’s CFO. However, Raman also highlighted the imperative to expedite project execution to attract foreign capital and propel the nation’s development journey.
Government’s Infrastructure Commitment
The 2024-25 budget earmarked ₹11.11 trillion for infrastructure projects, indicating an 11.1% increase from the previous year. Raman recognized this as a positive sign, emphasizing the government’s commitment to using investment as a catalyst for economic growth. He acknowledged that while the increased allocation is a step in the right direction, the potential of the country demands even greater investment.
Foreign Investment and Project Execution
Raman stressed the need for streamlining project execution processes to make India’s infrastructure more attractive to foreign investors. Delays in obtaining clearances and right of way were identified as significant obstacles. He expressed confidence that resolving these issues could unlock the interest of international funds, citing successful examples such as the Mumbai trans-harbour link and high-speed rail, which attracted global capital due to well-conceived programs and effective project management.
Challenges in Land Acquisition
One of the notable challenges discussed was land acquisition, a perennial issue in Indian infrastructure projects. Raman highlighted the complexity of the process, involving various government agencies at both union and state levels, coupled with ambiguous or absent land records. Despite these hurdles, he remained optimistic, emphasizing the government’s determination to address these issues.
Private Sector Capex and General Elections
On the topic of private sector capital expenditure (capex), Raman noted its increasing trend but pointed out that it may not match government spending. Large industrial houses, committed to long-term programs, cannot shoulder the entire burden of private capex, especially considering the predominance of small and medium-sized businesses in India.
L&T’s CFO also addressed the impact of upcoming general elections on new infrastructure orders, projecting a potential slowdown. He attributed a recent dip in new orders to state elections and highlighted a six-month assessment period to gauge the lasting impact of the upcoming general elections.
R. Shankar Raman’s insights provide a comprehensive overview of the challenges and opportunities in India’s infrastructure sector. While the government’s increased budgetary allocation is a positive step, addressing issues in project execution and land acquisition is crucial to unlocking the full potential of the country’s infrastructure development. As India gears up for general elections, the infrastructure landscape remains dynamic, with L&T and other stakeholders closely monitoring the situation to navigate through potential challenges and capitalize on emerging opportunities.