'Urgent need for consistency in policies for infrastructure growth'

Written by Press Trust of India | New Delhi | Updated: Jul 9 2014, 20:38pm hrs
Lack of consistency in policies needs urgent redressal apart from removing procedural bottlenecks to keep India's infrastructure ball rolling, the government said today.

"Removing procedural bottlenecks, improving governance, and above all maintaining consistency in government infrastructure policies are some issues that need to be urgently addressed" for sustainable infrastructure development, the pre-budget Economic Survey tabled in Parliament by Finance Minister Arun Jaitley said.

The key document expressed concerns that as many as 110 out of 239 central sector infrastructure projects, each costing Rs 1,000 crore or above, have reported delays, which range up to 26 months in case of steel, coal, power and petroleum projects.

"The total original cost of implementation of these 239 projects was about Rs 7,39,882 crore and their anticipated completion cost is likely to be Rs 8,97,684 crore, implying an overall cost overrun of Rs 1,57,802 crore (21.3 per cent of the original cost," it said.

It said: "Infrastructure will continue to be a bottleneck for growth and an obstacle to poverty reduction" unless sectors particularly transport, energy and communication, put under enormous burden due to recent years rapid economic growth, are significantly improved.

Also, it stressed the need for tackling on war-footing issues like problems in land acquisition, delays in regulatory approvals and environment clearances.

Pinning hopes on revival of investment it said, "Need has been felt to kickstart stalled infrastructure projects by stepping up infrastructure investment and increased private participation will usher in desired funds".

Government is promoting public-private-partnership for bringing private sector efficiencies in creation of economic and social infrastructure assets and for delivery of quality public services.

By end of March 2014, there were 1,300 projects in the sector with the total project cost of Rs 6,94,040 crore, it said adding to promote PPP, government is providing viability gap funding, support for project development, capacity building programmes and other tool kits, the survey said.

The survey mentioned that while growth in power and fertilisers segments was higher, sectors like coal, steel, cement and refinery witnessed lower growth.

"In the road sector, the National Highways Authority of India (NHAI) posted negative growth of 33 per cent during 2013-14 as compared to the 26.5 per cent growth during 2012-13," says the Survey.

As the survey highlights lack of consistency in government policies, the Transport Ministry last week had also blamed inconsistency in policies as well as warring ministries for brining India's road sector to its knees.

A total length of 21,787 km of national highways has been completed till March 2014 under various phases of the National Highways Development Project (NHDP), including a total of 1901 km in 2013-14.

India has the highest road network in the world, spread across 48.65 km and National Highways under NHAI with a total length of 92,000 km serves as arterial network of the country.

The performance of the coal sector in the first two years of the 12th Plan has been subdued with domestic production at 556 MT in 2012-13 and 566 MT in 2013-14.

It said India needs coal to the range of 715-720 MT and to meet the deficit it resorted to imports to the tune of 169 MT.

While the growth in production of power and fertilisers was comparatively higher than in 2012-13, coal, steel, cement, and refinery production posted comparatively lower growth. Crude oil and natural gas production declined during 2013-14, it said.

Power generation fell short by nearly 8 billion units of the target of 975 billion units in the last financial year but it was 6 per cent higher compared to 2012-13. It has added 38,583 MW capacity till April 2014 as against a target of 88,537 MW for the 12th Five Year Plan, it said.

Telecom sector, it said, has registered phenomenal growth during the past few years and has become the second largest telephone network in th world, next only to China.

Giving details of financial infrastructure, the survey states that the latest available data on gross deployment of bank credit to major infrastructure sector shows that the rate of growth of bank credit moderated from an average 44.8 per cent in 2011-12 to 17.7 per cent in 2013-14.

Power sector had an over 50 per cent share in total credit flow to infrastructure while both in terms of share in total credit to infrastructure and rate of growth, the telecom sector witnessed consecutive decline in the last three years.

It said the government has put in place a liberal FDI policy, under which FDI up to 100 per cent is permitted under automatic route in most sectors/activities.

"As a result, total FDI inflows into major infrastructure sectors registered a growth of 22.8 per cent in 2013-14 as compared to the contraction of 60.9 per cent during 2012-13," the Survey added.

The Survey recognising the need for streamlining environmental clearances of infrastructure projects, it said, "There is a need for better and more effective coordination amongst various central ministries/institutions regarding integration of environmental concerns athe inception/planning stage of a project".