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Big three mull core sector blitz

New Delhi, Feb. 14: Prime Minister Manmohan Singh is holding a series of meetings with finance minister P. Chidambaram and Planning Commission deputy chairman Montek Singh Ahluwalia to chalk out an infrastructure development plan valued at over Rs 30,000 crore.

However, strapped for cash, the government plans to budget only a fifth of the expenditure from its own coffers and hopes to bring in private partners who will come up with the rest of the cash.

Singh will meet chief ministers of key states soon to seek their cooperation in the mega plan. His economic aides have pointed out that infrastructural bottlenecks pulled down industrial growth through the Ninth Plan period to an average of 5 per cent, slowing the economy and creating few jobs.

The Prim Minister's plan, which seeks to develop highways, airports, ports, power, railways and urban areas through public-private partnership, will form one of the cornerstones of this year's budget.

'We want most of the money for the plan to come from private partners and bond issues and not from the Union budget,' top finance ministry officials said. The government will earmark up to a fifth of the funds from the central and state budgets, while the rest will have to come from private entrepreneurs.

'In all, we need about Rs 1,72,000 crore for highways alone over the next seven years, another Rs 40,000 crore again over seven years for airports. The railways will probably require about Rs 25,000 crore in five years,' officials said. For the railways, however, the government is likely to provide the entire amount through budgetary support or railway borrowings.

The government says private partners have to bring in the majority share of funds at 80 per cent of project costs in most other areas, which either they or the government can suggest.

Among the key projects that are likely to find pride of place will be plans to develop Calcutta and Chennai airports as well as airports in several other key metro cities.

Officials said new norms stipulate that firms which take up construction, maintenance or operations of these projects should have at least 40 per cent private equity, a move which bars most state-run infrastructure firms from bidding as contractors for the projects.

Top finance ministry officials said, 'Total central government money earmarked for such projects today stands at a measly Rs 1,500 crore and we know most state government finances are in a bad shape. So, naturally we have to depend on private sector firms to spend most of the money ' whether through equity contribution or loans.'

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