New Delhi: A majority of Indian corporates expects increased government spending on road and low-cost housing projects as high interest rates and credit crunch have delayed infrastructure projects by over six months, says a survey by industry body Confederation of Indian Industry, or CII.
Most of the infrastructure and related companies surveyed expressed concerns over the delays in financial closures of their projects and said the cost of projects has gone up by 5%-15%, the survey said.
Fifty percent of them said delays in financial closures was up to six months, while 35% said delays were more than six months, it said. However, the chamber did not reveal the number of companies surveyed.
“Eighty-three percent of the respondents expects the government to increase its spending on infrastructure by additional 15% or more to stimulate necessary demand in the economy,” it said.
The government should direct the suggested increased spending into roads and highways sector, low-cost housing, power and ports, the survey said.
“This additional government spending on roads and low-cost housing will provide the much needed boost to domestic demand for sectors such as steel, cement and other industry sectors. Further, such projects are also large employment generators,” CII director general Chandrajit Banerjee said.
The survey said private companies in the sector should be allowed to float tax-free bonds and setting up of an agency to facilitate implementation of infrastructure projects to deal with impacts of global financial crisis.