Finance minister P. Chidambaram means business. On Monday, after holding a three-hour meeting with senior bankers and corporate chiefs at Taj Mahal Hotel in Mumbai, he rushed to the airport to catch a flight to Chennai and spent two-and-a-half hours in the evening at Adyar Gate Hotel in Alwarpet, Chennai with another set of industrialists and bankers to sort out the mess and look for answers to one critical question: why are projects not taking off? What are the key issues responsible for vitiating the investment climate in Asia\u2019s third largest economy.
\nKumar Mangalam Birla, Anil Ambani, the Ruias of the Essar group and Ajit Gulabchand of Hindustan Construction Co. Ltd, among others, represented the industrialists at the Mumbai meeting, while the banking community was represented by the CEOs of Mumbai and Pune-based banks, including Pratip Chaudhuri of State Bank of India.
\nWith Rajiv Takru, financial services secretary, in toe, Chidambaram spoke to every corporate chief on every stalled project and wanted to know what went wrong and how to speed up the project implementation process. And, surprising many, he had all data at his fingertips.
\nHow many projects have been stalled? There are 215 projects involving investment of at least Rs.250 crore each, adding up to at least Rs.7 trillion. On top of that, some 127 new projects have not been moving. The money involved in these projects is around Rs.3.5 trillion. So, overall projects worth Rs.10.5 trillion have been stalled\u2014roughly about 20% of the entire banking sector\u2019s loan exposure.
\nBanks have so far given Rs.54,000 crore to these projects. But banks\u2019 reluctance to give money is not the reason why these projects have failed to take off. The main reasons are related to allotment of land, clearance from environment and forest ministry, and coal- and gas-linkages.
\nBetween 10 am and 1 pm, for three hours, Chidambaram dissected the state of affairs in each and every project\u2014ranging from Kumar Birla\u2019s Orissa steel project to Mukul Kasliwal\u2019s 400 megawatts (MW) Maheshwar power project in the Narmada valley in Madhya Pradesh, Gulabchand\u2019s Lavasa project near Pune and India Bulls Ltd\u2019s power project. He promised to sort out issues related to getting regulatory nod and coal- and gas-linkages through inter-ministerial committee meetings.
\nThe two-and-a-half hour Chennai meeting\u2014between 5.30pm and 8 pm\u2014also saw a proactive finance minister, eager to solve problems for the industry and push banks to commit funds. This meeting was attended by bosses from Ashok Leyland Ltd, the Murugappa group, TVS group and GMR, among a dozen industrial houses.
\nGMR group\u2019s Chennai outer ring road project is one of those that is not moving. The KSK Mahanadi Power project of the KSK Energy group is another stalled project. There have been cases where banks are not giving money even after sanctioning loans because NGOs (non-government organizations) have filed cases against the projects. Chidambaram has clarity on what he wants from banks. NGOs can file cases but that should not inhibit banks in giving loans; banks should not give loans when there is court stay on any project, he had told the bankers.
\nBoth bankers as well as industrialists swear that they have not seen any finance minister doing this before. Chidambaram kicked off the exercise in Bangalore and then had held a similar meeting in Delhi before the Mumbai and Chennai meetings. He will soon meet the industrialists and bankers of eastern India in Kolkata. Perhaps he wants to give a big push to the sagging investment climate before India goes to polls\u2014that could happen as early as November this year\u2014but none should deny him the credit of sincerely trying to figure out what went wrong and how to solve the problems. As a senior banker puts it, in these meetings India\u2019s finance minister is not behaving like an armchair CEO; he\u2019s there more like a factory manager, willing to soil his clothes with grease and dust, and eager to keep the machines running. <\/p>\n","protected":false},"excerpt":{"rendered":"
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