Davos: India is at the "cross roads" but is well positioned to take advantage of demand, democracy and demography to ensure infrastructure development and overall growth, State Bank of India chairperson Arundhati Bhattacharya said Wednesday.
Acknowledging that the country has made a number of mistakes when public-private partnerships (PPP) projects were started way back in 2002-03, Bhattacharya said the new government has been looking at ways to get projects framed in a better manner.
"India is currently at the cross roads. We have realised that a number of mistakes have been made.
"... I think the new government that has come in, has come in solely on the platform of growth. Their mandate is to ensure that India grows," Bhattacharya said during a session at the World Economic Forum (WEF) annual meet here.
She is the chief of State Bank of India (SBI), the country's largest lender.
"In India, today we have three things, of demand, demography and democracy, I think we are uniquely positioned to take advantage and get on with the infrastructure built that we need," she said.
In recent times, there have been concerns about rising non-performing assets in the banking sector especially those related to infrastructure projects.
On the reasons why public sector banks, which are the main financiers of infrastructure projects, are sitting on stressed assets, Bhattacharya said a number of mistakes were made when public-private partnerships (PPP projects) were started way back in 2002-03.
"There were questions regarding the doling out of natural resources, there were questions regarding transparency, there were delays regarding environmental clearances and land acquisitions. In fact if there was anything that could go wrong with the projects, it went wrong."
"As a result we saw the kind of impact we had from 2007-2013, the moods soured, the projects became unviable, there were huge cost overruns.
"... And today of course as a result of all of that the banking sector, which were the main financiers of this growth, they are sitting on quite a bit of stressed assets," she said.
According to her, the government has been looking at how they can get projects that are better framed, how they can give single window clearances and also how they can get more and more agencies, to participate in the funding.
"Changes are being made in the financing models, changes are being made by the government in ensuring that the projects are better prepared and the clearances come upfront.
"The promoters as well have realised that they cannot spread themselves too thin. They need to get in lot more equity to see these projects come to an end," she said.
India as a country is urbanising at a rapid pace, resulting in a manifold increase in the need for ensuring infrastructure development.
Bhattacharya said that the country needs infrastructure to also absorb millions of youngsters joining the work stream every year.
"We have about a million youngsters joining workforce every month. That means we need 10-12 million jobs that need to be created a year," she said adding that there is no way we can do this unless we have the right kind of infrastructure, be it power, transport, communication network, urbanisation".