One thing the companies in the infrastructure business do not have is money. To tackle this issue, the Government has decided to set up yet another institutional committee to look into the funding requirements of the industry. The committee is expected to look into the issues like risk-mitigation, bankability of projects and clarity of Government policies.While the Committee may well go over the issues of financing once again, the answer to the problem of funds is not unknown. Industry experts as well as Government officials admit that infrastructure projects need large amounts which can be repaid over two or three decades. This kind of funds can be generated only by insurance and pension companies. Not only do they have the amount required, but they can also afford to offer long term loans. But instead of speeding up the opening up of the insurance and pension sector, the Government is still setting up committees to discuss and identify solutions which are apparent to everyone. Clearly, it is easy to set up a committee instead of speeding up reforms.Interestingly in a meeting of financial institutions and industry called by the Cabinet Secretary TSR Subramaniam to discuss the issue of there was a demand that the Government cancel the licenses for basic telecom services. The telecom companies said that there were not enough funds for them to finance the projects.But even if funding was taken care of, it would not mean the end of trouble for the infrastructure industry. The Government is still grappling with policy issues on key sectors like power and road. Legal tangles, for acquisition of land for instance, remain a big problem. There is still some resistance to set up regulatory authorities by few ministries.May be these issues will be sorted out in the meeting called by Prime Minister I K Gujral this week to discuss infrastructure development. And hopefully yet another committee will not be set up.Oil pressureIt looks like petrol prices will be hiked only if there is external pressure on the Government. After a series of `yes, we are hiking the prices' and `no, we have to evolve a consensus' first statement, nobody really knows when and what the price hike will be. An interesting spin was added to the confusion when IMF said in its report on India that it has to increase the petroleum prices as part of the country's overall fiscal restructuring programme. If the country does effect the petrol price hike, it can be safely predicted that there will be strident cries of how the country is being governed by foreign powers. The oil pool deficit of Rs 15,500 crore by the end of 1996-97 will rise by another Rs 9,000 this year. While the international prices have been rising, the Government has not been passing on this costs to the consumers by raising the domestic prices.Among the other reforms the funding agency has recommended to maintain economic growth are flexible exchange rate management, an exit policy, privatisation of PSUs, removal of import quota barriers on consumer goods, and reduction of reservation for the small scale sector.Hitting the roofThe investment by foreign institutional investors has reached the ceiling of 30 per cent in Housing and Development Finance Corporation. This is the first instance of the ceiling being reached after it was raised from 24 per cent in this year's budget. Surprisingly, the share price of the company fell from Rs 4703 to Rs 4255 as many brokers rushed toe sell in the hope of getting a good price. After HDFC several more companies may see the FII's share rising.
