Montek Singh Ahluwalia: New govt will need to revive investments within three months

Written by PTI | New Delhi | Updated: Mar 6 2014, 14:57pm hrs
Montek Singh AhluwaliaMontek Singh Ahluwalia: The new government will need to revive investments and push infrastructure projects within the three months of being elected to bring economic growth back on track. (Reuters)
The new government will need to revive investments and push infrastructure projects within the three months of being elected to bring economic growth back on track, Planning Commission Deputy Chairman Montek Singh Ahluwalia has said.

"In my view, if these problems are not solved within the first three months, you can forget about getting back to high (economic) growth," Ahluwalia said when asked how important reviving investments and pushing growth would be for the new government after the general elections.

Speaking on the sidelines of a CII conference titled "Reviving Investments: Imperatives of Project Clearance', he said, "Any government that fails to solve this should actually announce that we cancel the growth path."

An annual average economic growth of 8 per cent is targetted in the 12th Five Year Plan (2012-17), which was approved by the country's apex decision making body National Development Council (NDC) and all cabinet and chief ministers on its board in December 2012.

However, the economy grew at a decade low rate of 4.5 per cent in the first fiscal of 12th Plan (2012-13).

The Central Statistics Office (CSO) has estimated that economy will grow at a rate of 4.9 per cent this fiscal. Thus, it is unlikely that the target of 8 per cent could be achieved.

About retaining the system of speedy clearance of big infrastructure projects by the Cabinet Committee on Investment by the new government, Ahluwalia said, "...new government must take on the fact that large infrastructure projects in critical areas have got stuck.

"We have started a mechanism that can work. I would hope that the new government will recognise that this is a very crucial area."

About Forest Advisory Committee, which is a statutory body of the Ministry of Environment and Forests, and appraises projects, Ahluwalia said stakeholders should be heard while evaluating the merits of a project.

These stakeholders like expert representatives of the concerned ministries should be allowed to submit their dissent note on various issues involved though without any veto power, he added.

On the announcement of election dates today, Ahluwalia said: "No new projects can be announced. If we have not announced a new project or a new policy, then we cannot announce it after the election notification is here.

"Given that most people complain that the government does not do enough implementation, the real message is that for the next three months only implementation is going to be done."

Asked about the proposal to allow FDI in railway and construction sectors, he said: "My understanding is that no new policy will be announced. Supposing that railways were to devote all the energies in implementing the projects that have already been announced and defer these by three months. I don't think. It is a great disaster. I don't think that matters."

About the prevailing system for projects' appraisal and approval, Ahluwalia said many regulations are very vague and arbitrary in nature and setting up of Cabinet Committee on Investment is only a short-term solution.

He also said that financing of infrastructure projects is an important aspect as things have changed after the US Federal Reserve decided to phase out stimulus and go for tapering in a phased manner.

According to him, the infrastructure debt funds would help boost projects in the country and revive investments that would ultimately push economic growth.

Ahluwalia also stressed on the need for pushing through the ambitious reform on indirect taxes regime, Goods and Services Tax.

GST envisages subsuming various indirect taxes at the state as well as the central level.