Prioritise spends

Mumbai: 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 government is 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. Raman also pointed out that even though the systemic liquidity is in surplus of over Rs 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.

Chief executive SN 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 him get as private sector is not investing.