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Business News/ Politics / Policy/  Sports ministry seeks infra status for stadium development
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Sports ministry seeks infra status for stadium development

The recommendation comes at a time when several private leagues have emerged across sports

The proposal will be taken up by a committee headed by economic affairs secretary Shaktikanta Das later this month. Photo: Ramesh Pathania/MintPremium
The proposal will be taken up by a committee headed by economic affairs secretary Shaktikanta Das later this month. Photo: Ramesh Pathania/Mint

New Delhi: A mini fillip to the infrastructure and construction business, the betterment of sports infrastructure, and the potential ancillary benefit of a few Olympic medals down the line—these would seem to be the motives behind the sports ministry’s recommendation to the finance ministry to accord “infrastructure status" to the development of stadiums.

“Declaring stadiums as an infrastructure sub-sector will allow them to access long-term finance from banks at a cheaper rate and avail tax incentives from the government," a government official said on condition of anonymity.

The proposal will be taken up by a committee headed by economic affairs secretary Shaktikanta Das later this month. The panel includes officials from various government departments and regulators Reserve Bank of India (RBI), Securities and Exchange Board of India, Insurance Regulatory and Development Authority and Pension Fund Regulatory and Development Authority.

The sports ministry’s recommendation comes at a time when several private leagues have emerged across sports such as cricket, football, kabaddi, tennis and even wrestling. Many are modelled on the Board of Control for Cricket in India’s popular Twenty20 league, the Indian Premier League.

If the recommendation is accepted by the finance ministry, sports stadiums will be included in so-called social and commercial infrastructure which presently includes educational institutions, hospitals, industrial parks, special economic zones, soil-testing markets and cold chains.

Finance minister Arun Jaitley announced the 5:25 scheme to address the challenge banks face when lending to infrastructure projects—a mismatch in time horizons. Banks rarely lend beyond five or seven years while infrastructure projects may take 25 years to be viable.

After Jaitley’s budget announcement, RBI allowed banks to extend 25-year loans to fund public works such as roads and ports, offering significant relief to developers by stretching the repayment period to cover the economic life of the project.

Such loans can be now be refinanced every 5-7 years, provided the projects continue to meet strict monitoring guidelines and do not become non-performing assets (NPAs) in the initial years.

To say that India has a deficient sports infrastructure is an understatement and each city in the country would need a small to large stadium, said Jaijit Bhattacharya, partner, infrastructure and government services, KPMG.

The challenge will be land acquisition and operation and maintenance, he said.

“Currently, stadiums are closed down after the sports events are over and they are not easily accessible to general public. The government needs to resolve these issues so that the revenue models are clear and sports infrastructure becomes a viable investment opportunity," he added.

The government should first allow the existing stadiums to be used for purposes beyond hosting, say, a cricket match once in six months and build a business model out of this, said Latika Khaneja, director of Collage Sports Management.

“The existing stadiums are highly under-utilized. Unless you allow private developers to open stadiums to public whereby they can charge a fee, who will invest in such infrastructure?," she asked.

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Published: 11 Dec 2015, 01:27 AM IST
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