New Delhi, Oct. 3: A panel on infrastructure financing has suggested certain big ticket reforms, including an increase in the FDI limit in telecom to 100 per cent, a hike in power tariff, rationalisation of rail fares and clarity on taxation issues such as GAAR.
The high-level panel headed by Deepak Parekh has stressed the need for overarching legislation to overhaul the regulatory framework in infrastructure and address concerns relating to land acquisition and environment.
The committee has submitted its interim report to Prime Minister Manmohan Singh this evening.
The committee has also made suggestions on how to access funds for infrastructure, which needs close to $1 trillion during the 12th Plan period (2012-17).
The recommendations are aimed at attracting Rs 51.46 lakh crore in infrastructure sector during the plan.
“Overarching impediments such as delays in land acquisition and environmental clearances, taxation/GAAR related issues and regulatory uncertainties need to be addressed urgently,” the committee said.
The proposal to introduce regulatory reforms through legislation also needs to be implemented. In the absence of these steps, not only will future investments be constrained but also existing investments will be at a risk in some cases.
The committee has identified a number of sector-specific issues constraining investment, especially private investment.
It feels the acceptance and implementation of its suggestions may help the government garner funds. In doing so, the committee noted that the projected investment of about Rs 51 lakh crore cannot be taken for granted. On the contrary, it is likely to fall short significantly if a number of measures necessary to remove policy hurdles and implementation impediments are not taken within a short time.
The government, the report said, should draw “a time- bound action plan... with a view to improving the enabling environment for private investment which is expected to finance about 47 per cent of the projected investment during the 12th Plan”.
The panel wants the government to pursue reforms in various sectors, including railways. It has suggested public private partnership (PPP) initiatives for railways to mobilise private investment, including the modernisation of stations, construction of elevated suburban corridors in Mumbai, development of new freight corridors, high speed rail projects and manufacture of diesel and electric engines, coaches and wagons.
The report said electricity, road and bridges, telecommunication and railways were the key infrastructure sectors accounting for 34 per cent, 18 per cent, 17 per cent and 11 per cent of the total investment, respectively, during the 12th Plan.
It has also said that a time bound action plan be put in place to implement its recommendations to create an enabling environment for the private sector.
The share of private sector in infrastructure funding was 37.53 per cent during the 11th Plan. The contribution of public sector is estimated to decline to 53.32 per cent in the 12th Plan from 62.47 per cent in the previous plan.