Investors, bankers to suffer if Maharashtra infra projects get stalled: Deven R Choksey

State governments often cancel or stall projects granted during the last regime. This unnecessarily creates a huge amount of financial consequences for both investors as well as lenders, apart from raising the risk of defaulting by companies, says Deven R Choksey, MD, KR Choksey. Excerpts from an interview with ETNOW.


It has been reported in media that the new Maharashtra Chief Minister Uddhav Thackeray has stalled payments of all the infrastructure projects which were announced in the last six months. Some of them were very large projects to ease the Mumbai traffic situation. A relook will be taken at all the projects. What exactly are we risking here? We saw a similar thing happening in Andhra Pradesh when Jagan Reddy took over. How are you analysing this?
The victims are the investors and the bankers apart from the companies which had taken up the contracts to serve the government related projects. When you stall these projects, you are unnecessarily creating a huge amount of financial consequences for both investors as well as lenders, apart from raising the risk of these defaulting by companies.

We have seen in the past also many companies including VA Tech Wabag which suffered because of policy inconsistency. Some of these activities would probably lead to a situation like this. My whole taken point is that this is going to dissuade the corporates from taking up any more projects in the country. It will also dissuade investors from coming into the country and from bankers to extending credit.

The entire pitch of the central government asking manufacturers to come to India and Make in India will also ultimately suffer. I wish there was some clause which would not let them touch any existing contract which have already been awarded.

Maharashtra is a peculiar state in that a large number of corporates have headquarters here. There is a very large population, at least in Mumbai and the large projects around Mumbai which have been announced -- be it Bullet Train, coastal road etc. are at risk now. But because it is a bigger contributor to the overall GDP and foreign investors mostly land here first and start interacting with the corporates. Do you think we are also risking India’s capacity to attract foreign capital?
Yes that is a threat that we are running. The international investors do not talk as much as we do. They only say that don’t let your country become a banana republic. This is where it hurts most because when you end up talking to the outsiders and he discards you with this kind of words, it becomes extremely difficult.