Govts are delaying payments, causing fiscal stress, says L&T

Housing sales rose by 16 per cent in value terms during the January-September period of this year to Rs 1.54 lakh crore across seven major cities, according to property consultant Anarock. Sales increased to nearly 2.02 lakh units during the nine-month period from 1.78 lakh units last year, Anarock Consulting’s Chairman Anuj Puri said.

Amazon India said it has partnered with the Indian Railways for a pilot programme to carry out inter-city transport of ecommerce packages. Amazon India would transport customer packages with the Railways on three routes from New Delhi to Mumbai, Mumbai to New Delhi and New Delhi to Kolkata. Amazon India is working with the Railways to build an e-commerce transportation product.

The Centre on Wednesday announced higher minimum support price (MSP) for rabi crops, or winter crops, for the marketing season 2020-21. The crops will be marketed from next April.

The Union Cabinet cleared the MSP hike for wheat by Rs 85 to Rs 1,925 a quintal and for pulses by up to Rs 325 per quintal. While the MSP of barley has been raised from Rs 1,440 to Rs 1,525, support prices for rapeseed and mustard oil, gram, safflower and lentils have also been increased.

The pro-farmer’s decision was taken by the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi. “In a move to increase farmers’ income, the Cabinet has increased the MSP of rabi or winter-sown crops for the current year,” Information and Broadcasting Minister Prakash Javadekar told reporters.

The MSP announced for this year is in line with the recommendation of the government’s farm price advisory body, the Commission for Agricultural & Prices (CACP).

Wheat has been taken as a top priority, as this rabi crop will be sown next month.

In order to encourage farmers to cultivate more pulses, the government has hiked the support price of masoor by Rs 325 to Rs 4,800 per quintal from Rs 4,475 last year. The MSP for gram has also been increased by Rs 255 to Rs 4,875 per quintal from Rs 4,620.

Among oilseeds, the MSP of rapeseed, or mustard, has been increased by Rs 225 to Rs 4,425 per quintal from Rs 4,200 and that of safflower by Rs 270 to Rs 5,215 per quintal from Rs 4,945.

Costs

Mumbai, Oct. 23: The government should overlook political expediencies, instead prioritise its spending to meet the needs of a struggling economy, engineering major Larsen & Toubro said on Wednesday.

The governments are delaying payments, leading to pressure on working capital, the management of the engineering major said, adding it cannot “afford” such a situation.

“The government has to prioritise allocation of funds to projects and contractors and also its vendors. It is very important that the government spend is not confined to political ends, but diverted towards economic ends,” chief financial officer R. Shankar Raman told reporters while announcing the second quarter numbers.

He was replying to a specific question on what can be done to revive the tottering growth.

Mr Raman also pointed out that even though the systemic liquidity is in surplus of over `2 lakh crore, bankers are not lending but clinging on to cash.

“I think there has to be a rediscovery of belief in the credit system. Ships are safest in the harbours, but they are not meant to stay in the harbours.

“Non-performing assets are part and parcel of any credit delivery system and that cannot be allowed to paralyse the flow of money,” he said.

The government should also get the stalled projects started which alone can create over 1 lakh jobs, he said.

L&T’s CEO S.N. Subrahmanyan said, “The government must allocate funds for the right reasons” as government orders account for almost 70 per cent of business for companies like his get as private sector is not investing.

“Given that the government is free of elections now it should get into governance and push projects,” he said.

Mr Raman said the Centre, the states and also state-run enterprises are delaying payments, leading to pressures on working capital for them, and that the usual tendency of getting payments in the second quarter has not been observed this year.

“Unfortunately, our results and our financial health being such, there is a presumption in the system that we can afford (it) and that is something we need to fight...we can’t afford it,” he asserted, speaking of a need in perceptions.

Mr Raman said despite all these, L&T has been honouring payments to all the vendors, roiling its financial performance.

Mr Subrahmanyan pointed out that the government has gone slow on roads projects and the company, which has invested heavily in the sector, needs orders of over `15,000 crore in second half from NHAI to meaningfully sustain its investment.

He also said the ambitious bullet train project is also not going as planned and sought a “push” from the government for the same. As most of the work on the dedicated freight corridors is over, revenue booking from this stream will be hit soon, he said, adding more such mega projects are essential for the economy and companies like his.

As the residential and commercial realty projects are down, L&T has to depend on institutional projects for bagging constriction projects, the CFO said.

It is very important that the government spend is not confined to political ends, but diverted towards economic ends

— R. Shankar Raman, CFO, L&T