The government may substantially increase the outlay for the proposed industrial corridors in the forthcoming Budget for 2016-17 as it plans to approve a proposal to establish a National Industrial Corridor Authority (NICA).
Official sources told The Hindu , after exhausting Rs.1,200 crore allocated in Budget 2015-16, the Department of Industrial Policy and Promotion (DIPP) had asked the finance ministry to provide Rs. 3,000 crore in the coming fiscal for the development of industrial corridors.
The DIPP is the nodal agency at the Centre for industrial corridors.
The corridors include Delhi-Mumbai Industrial Corridor (DMIC), Amritsar-Kolkata Industrial Corridor (AKIC), Bengaluru- Mumbai Economic Corridor (BMEC), Chennai-Bengaluru Industrial Corridor (CBIC) and Visakhapatnam-Chennai Industrial Corridor (VCIC or the East Coast Economic Corridor).
“… as the pace of expenditure picks up, I will provide them (corridors) additional funds,” Mr.Jaitley had assured in his Budget 2015-16 speech in February last year.
The DIPP had sought an outlay of Rs.7,478 crore for 2015-16 for the development of infrastructure and other projects in the DMIC after expressing dissatisfaction over the 2014-15 interim Budget estimate of only Rs.693 crore. The Union Cabinet is also expected to grant its approval for a proposal to establish NICA for fulfilling a promise made by Finance Minister Arun Jaitley.
In his Budget speech, 2014-15, Mr. Jaitley had said the proposed NICA will be headquartered in Pune and coordinate the development of the industrial corridors. The corridors, with smart cities linked to transport connectivity, will be the cornerstone of the strategy to drive India’s growth in manufacturing and urbanisation, the minister had said and provided an initial corpus of Rs.100 crore for NICA. However, the proposal was not taken up by the cabinet.
Meanwhile, the financial assistance announced by the Indian Government — in the form of grant of Rs.17,500 crore -- for the development of industrial cities in DMIC as well as the Japanese Government’s financial support (worth $ 4.5 billion for the first phase of the DMIC) were only for a period of five years from 2011. With the five-year period set to expire in September this year, the DIPP wants the Union Cabinet and the Japanese Government to approve the extension of the time period of the financial assistance by another five years, the sources said. The Cabinet nod for extension of the time frame is also likely along with NICA.
Though the DIPP had considered a proposal to subsume the DMIC Development Corporation (DMICDC) and the DMIC Project Implementation Trust under the NICA, it has now deferred a decision on the issue, the sources said. A final view on the matter will be taken only after talks with Japan as the country’s government-owned Japan Bank for International Cooperation (JBIC) holds a 26 per cent stake in DMICDC.
Transferring the JBIC stake to NICA on a proportionate basis is a complicated process, the sources said.
Bringing all the corridors under the ambit of an Authority (NICA) — on the lines of the National Highways Authority of India — is aimed at providing certainty to investors as well as to multilateral agencies like Japan International Cooperation Agency (JICA) and JBIC (which are supporting DMIC and CBIC) and the Asian Development Bank (which has completed a conceptual development plan for VCIC).
The government was also considering a proposal to bring into force a NICA Act on the lines of the NHAI Act. Since that move would need Parliament approval and therefore, is more time-consuming than giving a Cabinet approval to the NICA, it (tabling an NICA Bill before Parliament for its passage) has also been deferred for the time being, the sources said.
