Prime Minister Manmohan Singh on Saturday promised to come out with a complete policy on infrastructure, including regulatory and institutional framework, for making the sector attractive for private participation.
"In the coming weeks and months, we will finalise a framework on the remaining areas of infrastructure including policy, regulatory and institutional framework," he said, inaugurating a conference in New Delhi on infrastructure, while inviting the private sector and other stakeholders to participate in the consultation process in this regard.
Singling out power, where transmission and distribution losses are at a staggering 40 per cent of total generation, as the most critical area of concern, Dr Singh said the Planning Commission had estimated a massive Rs 14,50,000 crore investment requirement for development of infrastructure by 2012.
Public investment has its limitations and unless the private sector came forward, either through participation with public sector or on its own, infrastructure would remain an area of concern, the prime minister said, while assuring the industry of a totally transparent and competitive bidding route in tandem with an effective regulatory and speedy dispute resolution mechanism.
Replying to a query, Dr Singh admitted that more was needed to be done on the regulatory front for a totally independent and transparent mechanism to suit Indian requirement. But this is something that needs to be decided on a pragmatic consideration.
Even to sustain the present 8 per cent growth witnessed in the last three years, India needed improvement in its policies. But for furthering the growth to 9-10 per cent, it required substantial additional efforts, particularly to boost agriculture and manufacturing sectors.
Listing out the resource requirement in specific sectors like roads, ports and airports as also the government policy initiatives, Dr Singh said to address the areas that could be only marginally viable, the government had opened a window of viability gap funding in Finance Ministry. Besides it had set up India Infrastructure Finance Company for facilitating long-term debts to project promoters.
At the same time, he asked the private sector to be considerate to the consumer requirements and pricing to ensure that they provide quality service at reasonable tariff.
Lauding the role of private players in core sectors, the prime minister noted that their participation in telecom and aviation had not only led to improved services and
Today, in India the cost of telecom services was lower than anywhere in the world, while the aviation sector had recorded over 20 per cent growth in tandem with significant drop in fares.
Seeking to recreate this success in the crucial power sector, Dr Singh asked the state governments to take immediate steps to reduce transmission and distribution losses to make this area financially viable for the private sector.
When asked how much investment the government was expecting from overseas to meet the $320 billion funds for infrastructure development, Dr Singh declined a direct reply but said that bulk of savings and financing have been and would continue to be domestic.
Earlier, Chidambaram said that India's infrastructure sector alone could absorb FDI to the extent of $150 billion over the next few years. He said that the investment flow during the 11th Plan had to grow to 8-8.5 per cent of GDP from the present level of 4 per cent.
"The investment in infrastructure will almost have to be at the same rate as the growth of economy that we are seeking to achieve," he said.
The savings rate is 28-30 per cent and given the young profile of our labour force, it will grow by 4-5 per cent in the coming years.
He said if the country attracted foreign capital to the tune of 2 per cent of GDP, which is within the limits of prudence, the balance of payment will continue to be in good shape.
On the proposed SEZ policy, Finance Minister P Chidambaram said: "Contrary to the common perception, both Commerce Minister and I hold the same view on this issue."
He said the problems are being exaggerated and as has been said by the Prime Minster, SEZs are here to stay and all the concerns would be taken aboard by the Empowered Group of Ministers and if necessary by the prime minister too.
"Land acquisition is not a stumbling block," he said, added that SEZ is a part of government policy. Commerce Minister Kamal Nath said SEZ is not a new concept as the country earlier had Export Promotion Zones.
"SEZs are infrastructure and export-driven and we decided to bring out an Act to boost investors' confidence," he said, clarifying that the first preference should be given to waste land and not prime agricultural land.
"No SEZ is approved unless the state government supports it on the basis of project report," he said, adding that the state governments should ensure that the land used by the industry is not prime farming land.
