The crucial role infrastructure development plays in easing supply side constraints to economic growth has been well recognised. In common with all its predecessors, the recent budget accords priority to infrastructure finance for very valid reasons. The requirements are huge: according to the 12th Plan, as much as Rs. 55,00,000 crore is required for investment in infrastructure, with nearly 47 per cent coming from the private sector. Not just the scale but certain special features of infrastructure finance make the task especially daunting. Commercial banks, which seldom accept deposits for longer than three years, run the risk of a balance-sheet mismatch in lending to infrastructure projects, which are of a long duration. In his budget speech, the Finance Minister outlined a few steps that will enhance the quantum of funds available through dedicated institutional arrangements. For instance, a few more infrastructure debt funds, in addition to the four existing ones will be set up. These will provide long-term, low-cost debt through innovative means for infrastructure projects. The India Infrastructure Finance Corporation, in league with the Asian Development Bank, will facilitate access to the bond market for long-term funds. The limit for tax free infrastructure bonds has been increased to Rs.50,000 crore during fiscal 2013-14.Trading in debt instruments through the stock markets has been made easier. A regulatory authority for the road sector to take care of special challenges such as enhanced construction risk has been announced.
In the broader area of reviving investment, the only fiscal measure of note in the budget has been the introduction of an investment allowance of 15 per cent for a period of two years for new, high value investment of a minimum of Rs.100 crore. Welcome as this is, it is doubtful whether one measure alone is sufficient given the nature of the slowdown. According to the Economic Survey, new investments have been drying up across sectors, partly as a consequence of rising stalled projects that reduce the ability of firms to start new ones. Almost 80 per cent of the stalled projects are in key infrastructure areas such as electricity, roads and telecommunications. From a macroeconomic perspective, it is important to step up the investment rate, which had declined to 35 per cent in 2011-12 from 36.8 per cent the previous year. Gross domestic savings have also fallen sharply to just over 30 per cent in 2011-12. The household sector, which contributes the most to domestic savings, must be incentivised further. The budget’s specific proposals, including reviving the Rajiv Gandhi Equity Savings Scheme, and the promise of inflation-linked bonds are hardly inspiring.
foremost reason behind decline in prominent sectors of the
economy,health indicators, is creaky infrastructure.As 12 five plan has
predicted the need of one trillion dollar investment in next five
years.FM should ensure that not just once albeit there is need of at
least three or four budgets with heavy funds to infrastructure
growth.Only then we can expect some drastic change in India growth
story..
Infrastructure building is key to attract investment as well support to the other core segment increasing in productivity. During NDA reigme under golden quadrangle project everday day few kilometers worth project going on now kind of finish not happened during UPA regime and certainly set back to the key industries like steal and cement and other allied industries. I would like to recollect famous proverb that any state economy can be determained by its roads. But luckily in this budget finance minister proposed to set up road regulatory authority to monitor standard and quality of the road is welcome one. Union government has to take an speedy action in implementing the ongogign infrastrucuter projects across the country as well changing the strategy in proposed projects to execute within fixed period or esel contract awarded company has to pay fine on per day basis for delay in executing in time, for that government must and should provides requisite facilities which is fall in its
What the editorial advocates makes sense and is well recognized. Unfortunately the current
govt lacks the determination and a sense of urgency to push through the changes necessary
to treat the infrastructure bottleneck on a war footing it deserves. Time for change, time for a
determined and focused leadership to pull the country out of its funk and gradual descent
into a disastrous future with sky high inflation and meager growth rate with its accompanying
bleak job prospects for the burgeoning young population - end result is social unrest, rising
crime and poverty.
Often we think of infrastructure in terms of funds to support that develepment in physical terms. The unfortunate aspect of this is that we don't associate it to equitable distributions in every sense that should include educational facilities to generate manpower to support this development as well as maintenance of same across the population, decongest urban population by creating semiurban centers with all attendant facilities, improve everywhere (including villages) the availability and quality of water, food, sanitation and all that will not move agricultural based population to imaginary fancy life of urban life, etc. Instead, we seem to be promoting one high end of development and try to battle with poverty without bringing the poor or middle class from their rut. Even if government is helping, it should impress the people about it.
Large limit for issuance of Long Term (10-15 years)Tax Free Bonds should
be given to Indian Railway, Port Authority, NTPC, Higway Authority etc.
and young as well as retirees / farmers , who are not in need of
immediate need of Finds be invited to invest for the good of their own
/children future. Of course, Inflation need to be moderate otherwise
investor will be looser and may invest in properties instead.
(Why not take the simple measure of setting up a GoM which would consider comprehensively projects in all modes.
Private and public sectors alike would need to give up greed while undertaking infra projects in national interests even while reaping reasonable profits.
This leaves us with civil servants who are important players in infra development. Look at Britain which has set up a committee under Lord Deighton, who helped build Olympic village. One of its tasks is to find out whether their concerned civil servants have the necessary skills or not. They even send their civil servants to the Oxford School of Management to train them how to interact with private sector. Why not think of using the builders of Kumb Mela facilities from our own UP to tell our civil servants on infra building?
said that it would take 150 years at the rate in which we provide funds to complete our projects.
Our waterways are being neglected. Five litres of fuel can carry a tonne of goods by road for 100 kms, but by rail 333kms and by boat 555 kms. Minister Elangovan is thinking of a high powered committee to coordinate infra projects in all the modes. Why not take the simple measure of setting up a GoM which would consider comprehensively projects in all modes.
Private and public sectors alike would need to give up greed while undertaking infra projects in national interests even while reaping reasonable profits.
This leaves us with civil servants who are important players in infra development. Look at Britain which has set up a committee under Lord Deighton, who helped build Olympic village. One of its tasks is to find out whether their concerned civil servants have the necessary skills or not.
Infrastructure is just being used as a ‘mantra’ by our govt. Mantra by itself will not deliver goods unless backed by their commensurate efforts on the ground.. Here the efforts are slack. Funds should not be a problem if we encourage domestic avenues. Remember what Dr. Deshmukh did. He nationalised life insurance and said that this measure was for canalising savings of the people in the context of the then ensuing II Plan. LIC has contributed over Rs. 135 lakh crores thus far as Plan contributions! But our govt has not even looked into why private insurance companies had closed down 300 branches in the last three years even as it is anxious to further open life insurance. More needs to be done to canalise peoples’ savings which are available in abundance,
Why are you leaving out railways to the list of areas where efforts are lacking? CA former cabinet secretary in his memoirs (2004)said that it would take 150 years at the rate
This is a high time for government to take hard steps rather than toe
down to the populist policies. Economic slowdown is less due to the
global week sentiment & more due to the reduction in investment in
capital projects. A number of projects are held up for environmental &
other clearances. While it is accepted that growth can not be taken as an
excuse to allowing environment degradation, over protection & delay in
capacity build up will result in long term negative consequences.it was
indispensable to set up a cabinate committee to speed up decision
making process, only formation will not suffice & it's output should
not be left at the political considerations.
Please Email the Editor