Infrastructure got a major thrust in the Budget for 2013-14 with the Finance Minister, Mr. P. Chidambaram, announcing a slew of measures to boost the sector’s growth, like raising Rs. 50,000 crores through tax-free bonds, setting up of major ports and a road regulator.
“While every sector can absorb new investment, it is the infrastructure sector that needs large volumes of investment,” he said in his Budget speech emphasising the need to create “new and innovative instruments to mobilise funds” for meeting infra investment targets of Rs. 55,00,000 crores in the 12th Plan. The private sector will share 47 per cent of the investment.
The Minister said: “The key to restart the growth engine is to attract more investments, both from domestic investors and foreign investors… We will improve communication of our policies to remove any apprehension or distrust in the minds of investors.”
Debt funds for infrastructure would be encouraged and tax-free bonds of up to Rs. 50,000-crores would be allowed in 2013-14. The Government would also seek funds from multilateral agencies like the World Bank and the Asian Development Bank to build roads in the north-east, linking it to neighbouring Myanmar.
To give a big push to the highways sector, he said a road regulatory authority has been proposed to address issues adversely impacting the sector like financial stress, enhanced construction risk and contract management.
The bottlenecks stalling road projects have been addressed, and 3,000 km of road projects in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh will be awarded in the first six months of 2013-14.
Mr. Chidambaram further observed: “The Delhi Mumbai Industrial Corridor (DMIC) project has made rapid progress. Plans for seven new cities at industrial corridors have been finalised and work on two new smart industrial cities at Dholera in Gujarat and Shendra Bidkin in Maharashtra will start during 2013-14.”
The Economic Survey, presented on February 27, too pinned hopes on the newly set up Cabinet Committee on Investment (CCI) for resolving specific issues facing the infrastructure sector and reviving investment climate and sustainable growth. It said: “In the current macro-economic environment, to achieve this objective there is need to address sector-specific issues over the medium to long-term horizon in India… A high level of investment in the infrastructure sector is essential for the overall revival of the investment climate.”
The recently constituted CCI is expected to resolve issues involving inter-ministerial co-ordination for the critical infrastructure projects, it added.
Progress of many road and coal projects have suffered due to problems like delays in obtaining environmental clearances, land acquisitions and rehabilitation. The Survey called for suitably addressing the issues in the fast-track mode for achieving the 12th Plan (2012-17) targets.
Besides, to attract new investment and to quicken implementation of projects, Mr. Chidambaram said there would be an investment allowance for new high value investments.
“A company investing Rs. 100 crores or more in plant and machinery during the period 1.4.2013 to 31.3.2015 will be entitled to deduct an investment allowance of 15 per cent to the investment, in addition to the current rates of depreciation. There will be enormous spill-over benefits to small and medium enterprises,” he added.
– PTI Economic Service