Infra development onus to remain with govt agencies

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The government will continue to shoulder the bulk of the investment required for the infrastructure sector, even though it hopes that the private sector would pitch in significantly. "It is our belief and experience that the bulk of the resources for infrastructure would still have to be found through the public sector," finance minister P Chidambaram said on Tuesday.

However the main role of the Asian Development Bank (ADB) as a multilateral development bank should not be diluted by its over-emphasis on non-sovereign loans at the cost of sovereign loans, the minister noted while addressing the annual general meeting of the ADB in Spain.

In this regard he called for a portfolio restructuring plan by the international bank to increase its share of private sector loans annually to 50% which would promote a vibrant public sector. "This twin strategy will succeed only if total loan approval and disbursement is enhanced significantly," Chidambaram noted.

The ADB should also stress more on development of agriculture and irrigation and on health-related infrastructures, he said, warning that it would be both premature and inappropriate for bank to disengage from agriculture fully. "Improvement in irrigation infrastructure is important for increasing food grain production," he added.

Meanwhile speaking at an informal meeting of Saarc finance ministers in Madrid on Monday, Chidambaram had stressed that the government would contribute the bulk of funds required for developing core infrastructure by providing as much as $ 350 billion out of $ 500 billion needed in the next five years. The private sector is expected to provide only $150 billion for this.

Roads, ports, power and electricity, aviation along with urban transport and irrigation are some of the key areas in infrastructure where massive investments are needed.

The minister also cautioned that while there is opposition from some quarters to reduce public sector spending on development of infrastructure, he hoped that ADB would not heed this. "I would urge that we advise ADB to proceed with caution," he said.

The private sector is expected to provide only USD 150 billion for development of core infrastructure sector, the Minister said, adding that Asian Development Bank (ADB) should not ignore the public sector while shifting focus to private sector.