Finance Ministry directs infra ministries to assess impact of demonetisation

NEW DELHI: The finance ministry has directed six main infrastructure ministries to do an on the spot assessment of demonetisation on their sectors, sub-sectors or specific projects.

The department of economic affairs has sought status reports from ministries of urban development, road transport and highways, power, shipping, civil aviation and the railway board for the first time since the announcement of demonetisation by Prime Minister Narendra Modi on November 8.

Prior to this, the government had sent teams of bureaucrats to study the immediate impact of note ban. The teams had then red-flagged the loss of livelihood in rural areas and the adverse impact on the farm sector during the rabi season.

The letters addressed to secretaries of ministries say the finance ministry’s coin and currency division has sought a status report on the impact of demonetisation on infrastructure sector. The reports would be studied to gauge if the government needs to take any targeted steps to avoid economic slowdown.

A senior government official told ET, “We have been asked to study the impact of demonetisation on not just the overall sector but also of projects that may fail to take off.” The government is also worried about its adverse impact on big-ticket flagship programmes, including Housing for All, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), smart cities mission and Swachh Bharat.

The official said, “The government is very cautious about its performance in the infrastructure sector. Since the government has reached the half-way mark of its term, any adverse impact on infrastructure will not bode well for the economy.”

According to sources, ministries have already reported a slight slowdown in private sector interest in public-private partnership (PPP) projects. However, there are areas that have seen a sudden spurt. The urban development ministry has reported a sharp increase in property tax collections by municipal bodies. “But this does not necessarily classify as an infrastructure sector indicator. The increase has really been because municipal bodies allowed users to pay their property taxes and other charges in old Rs 500 and Rs 1,000 notes,” the official said.