High interest rates, input costs concern infrastructure sector

Monday, 29 September 2008, 11:39 Hrs
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New Delhi: Investments for India's infrastructure projects are on track, but high interest rates and input costs are a major concern for developers, according to a new survey by an industry lobby.

The infrastructure outlook survey by the Confederation of Indian Industry (CII) said: "About 67 percent of the CEOs of major infrastructure developers and financiers of infrastructure projects said that infrastructure investments are on track."

It added that the increase in inputs and interest costs have lead to cost overruns.

The increase in inputs costs, as revealed by 46 percent of the respondents, is expected to be in the range of 10-20 percent of the infrastructure project costs. Another 23 percent of the respondents expected this incidence to be more than 20 percent.

The survey revealed that 46 percent of the respondents expected the increase in costs to be absorbed by infrastructure project developers, while 15 percent of the infrastructure companies expected the cost to be passed on to their clients.

While assessing the impact of the input cost hike, the survey said 58 percent of the respondents expected that there would be a renegotiation of prices, which may lead to delays in implementation of projects.

Assessing the factors responsible for delays, 81 percent of the participants felt that land acquisition continues to be the topmost concern for project developers.

The other key reasons for delay, according to the survey, are environmental clearance and other government approvals.
Source: IANS
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