union budget has tried to put the focus back on infrastructure,
providing budgetary support to some major projects for
the fiscal 2007-08. According to a statement today by
the Central Statistical Organisation, the country''s
$854 billion economy expanded at the slowest pace in
a year last quarter. This would have added a furrow,
howsoever mild, to finance minister P Chidambaram''s
Economic Survey released yesterday, estimates that the
economy will grow at 9.2 per cent in the fiscal year,
ending March 31, the fastest pace since 1989. The growth
rate is second only to China''s, among the world''s major
economies. If the pace is to be sustained, infrastructure
woes will have to be addressed. Analysts point out that
infrastructure shortfalls are affecting supplies and
boosting manufacturing costs.
to new budgetary provisions, existing Government spending
on infrastructure including those on ports, power generation
and roads will be raised by 40 per cent to Rs1.34 trillion
($30.2 billion) in the coming fiscal.
of the investments required put the figure at Rs1,450,000
crore or about $320bn, during the 11th 5-year plan.
Such massive investments can only be achieved throuh
a combination of public investment, public-private partnerships
(PPP) and solely private investments on a case to case
committee on infrastructure estimates that Rs220,000
crore would be required for modernisation and upgradation
of highways, Rs40,000 crore for civil aviation, Rs50,000
crore for ports and Rs300,000 crore for the Indian Railways.
In the case of teh Railways atleast 40 per cent is expected
to come from the PPP mode.
Chidambaram has reduced import tariffs, for the second
time in five weeks, in a move aimed at reining in prices.
Maximum customs rate for manufactured goods have been
slashed to 10 per cent from 12.5 per cent. The move
aligns the rates with those of the Association of Southeast
Asian Nations (ASEAN), where tariffs range between zero
and five per cent.
According to finance ministry estimates, India is producing
about 8 per cent less electricity than it needs, which
affects gross domestic product by at least ten per cent.
this regard Chidambaram has pointed out to the parliament,
that apart from the two Ultra Mega Power Projects (UMPPs)
already initiated, a final decision on at least two
more would be made by July 2007.
support for accelerated power development and reforms
programme (APDRP) had been increased to Rs800 crore,
along with allocation for the Rajiv Gandhi Grameen Vidyutikaran
Yojana as well as the national highways development
to the finance minister, with the accelerated power
development and reforms project (APDRP) significantly
reducing aggregate technical and commercial losses in
213 towns, the project was being restructured to cover
all district headquarters and towns with a population
of more than 50,000. Budgetary support for APDRP has
now been increased from Rs650 crore in 2006-07 to Rs800
crore for the coming fiscal.
also announced an increase in allocation for the Rajiv
Gandhi Grameen Vidyutikaran Yojana from Rs3,000 crore
in 2006-07 to Rs3,983 crore in 2007-08.
constitute only about 2 per cent of the country''s roads,
though they carry almost 80 per cent of the goods transported
across the nation. Ships take an inordinately long time
to load and unload cargo at the country''s major ports.
said that provision for the National Highways Development
Programme (NHDP) had been enhanced from Rs9,945 crore
in 2006-07 to Rs10,667 crore for the coming fiscal.
In this regard he also mentioned that the road-cum-rail
bridge over the Brahmaputra at Bogibeel, Assam would
be taken up as a national project.
Chidambaram noted that the public-private partnership
model had enabled greater private sector participation
in infrastructure building. So far, under the viability
gap funding scheme, 37 proposals have been received
of which 21 proposals have been granted ''in-principle''
approval with a total project cost of Rs9,842 crore
and an estimated viability gap funding of Rs.2,521 crore.
In this regard Chidambaram said that there was a need
for a more aggressive approach in preparing a shelf
of bankable projects that could be offered for competitive
Apart from the initiatives already taken towards building
capacity and engaging consultants, Chidambaram has also
proposed the setting up of a revolving fund to hasten
project preparation. The fund will have a corpus of
Rs100 crore and will contribute up to 75 per cent of
the expenditure undergone in the preparation of reports.
The money will be advanced in the form of interest free
loans and will eventually be recovered from the successful
to analysts, thanks to an accelerating economic growth
and buoyant tax revenues, finding resources for spending
on infrastructure should not pose too much of a problem.