Mumbai: Larsen and Toubro's Chief Financial Officer R Shankar Raman is anticipating a ten per cent increase in capital expenditure outgo in the upcoming budget for FY27. Amid concerns about sagging private capital expenditure growth, Raman said that he does not fear a "crowding out" of resources because of the high spending by the state. The ample liquidity in the system will support such investments.
"If India is to become a developed economy by 2047, infrastructure has a lot of role to play, and I think the government is seized of this. I am hopeful that they will allocate adequate resources in the budget to be able to do that," Raman told PTI recently. Pointing to the over Rs 11 lakh crore commitment for capital expenditure in the FY26 budget, Raman said the new document to be presented by Finance Minister Nirmala Sitharaman in a few weeks will continue on the same lines.
"They will possibly go for a 10 per cent increase...that is what I am anticipating, but that's at a personal level," he said. There is already a jump in the way large infrastructure projects are getting conceived, Raman said, underlining that "infrastructure has miles to go". He, however, rued that sometimes, projects are handed over to the lowest bidder, who may not be the best equipped technically, and this leads to execution delays. Raman said the government has recommended all departments to adopt a "qualitative-based pricing mechanism" under which weightage is also given to the timely completion of a project and other aspects.
As long as the "balance" between the price of a bid and other aspects like an entity's ability for timely completion is followed, good companies will bag contracts, he added. When asked about the manpower shortages, which the country's largest engineering, procurement and construction company has been flagging for some time now, Raman said the challenges continue. Availability of alternatives makes construction a less favoured occupation, and moreover, with the government promising employment for up to 125 days, people think twice before uprooting themselves from their native place, he added.
Raman said the pandemic changed people's mindset, as they were not able to find it difficult to reach homes in times of crisis after the lockdowns, which has also caused some shift in thinking. "The best antidote to that would be to take projects closer to their places of residency, which means you will have to go deeper into the country, which is what I think the government is doing, which is what all of us are also trying to do," the CFO said. On the private capital expenditure front, he said companies across sectors like automobile, construction equipment, steel, minerals and metals, semiconductor and electronics are investing at present.
He welcomed the government's openness to discuss suggestions from the industry and all important stakeholders in the budget-making process and called it a sign of a mature system of governance.
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