New Delhi, Oct. 7: The government is planning a new infrastructure policy framework which would involve changes in regulatory mechanism.
“In the coming weeks and months, we will finalise the policy, including the regulatory and institutional framework for public-private partnership in infrastructure,” Prime Minister Manmohan Singh told a conference on infrastructure here.
The country needs $320 billion, or Rs 14,50,000 crore, investment in the core sector by 2012, Singh said. He has revised his earlier estimate of $150 billion on the premise that an economy growing at 8 per cent needs matching investments in infrastructure.
The government has been trying to improve roads, airports, railways and other infrastructure to attract investments and spur economic growth. But fund constraints, lack of transparent policies and red tape are seen as major hurdles for investors in the key sector.
Singh said the best approach to infrastructure development is the pubic-private partnership model. However, for the model to succeed, a proper policy framework on returns for investors, tariffs and service quality needs to be framed. “All this requires independent regulatory bodies with an appeal mechanism,” he added.
The Prime Minister also said a target of 10 per cent GDP growth was achievable if India could “boost agricultural and manufacturing growth” by clearing up infrastructural bottlenecks.
Singh identified power as a major bottleneck and blamed high transmission and distribution losses for this. India loses almost 40 per cent of the electricity it produces through T&D thefts and losses.
He listed the resource requirement in specific sectors like roads, ports and airports along with government policy initiatives. To address the areas that could be only marginally viable, the government had opened a window of viability gap funding in the finance ministry. Besides, it had set up an India Infrastructure Finance Company for facilitating long-term debts to project promoters.
By 2012, Singh said, India would require Rs 2,20,000 crore to modernise and upgrade highways, including Rs 40,000 for its ambitious golden quadrilateral project of highways connecting the four major metros.
Only about 15 per cent of the golden quadrilateral project cost would come from the government coffers, while the rest would come from private partners, Singh indicated.
Around Rs 40,000 crore would be spent to refurbish airports and another Rs 50,000 crore to build 76 berths in sea ports. Besides, the railways would use up to Rs 3,00,000 to develop private container trains, freight corridors and improve facilities in railway stations.
Dubbing as a ‘matter of concern’ the deficit in infrastructure, Singh said “our growth potential will be realised only if we can ensure that our infrastructure does not become a severe handicap. The quality and capacity of our infrastructure is certainly a matter of concern to one and all. We must deal with this deficit.”