Political & financial woes block state-level infra PPPs

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SummaryDespite Prime Minister Manmohan Singh’s optimism about the role of private investment in realising the 12th Plan goal of $1-trillion investment in infrastructure, states bogged down by naxalism, insurgency, political turmoil and empty coffers don’t expect private investments to flow in.

Despite Prime Minister Manmohan Singh’s optimism about the role of private investment in realising the 12th Plan goal of $1-trillion investment in infrastructure, states bogged down by naxalism, insurgency, political turmoil and empty coffers don’t expect private investments to flow in.

State chief ministers and chief secretaries with whom FE interacted on the sidelines of the National Development Council meeting on Thursday were of the unanimous view that in most cases, attracting private investments won’t be a viable option for creating infrastructure and the Centre has to pitch in with the lion’s share of funds. They want the Centre to step up public spending in infrastructure.

Jharkhand CM Arjun Munda said: “For a state like ours which is naxal-infested, private players don’t want to invest in infrastructure. How will we create infrastructure then? The UPA government says the stress has to be on the PPP model in building infrastructure but I don’t think it would be viable for us. Anyway, we are demanding a special status for our state.”

The Planing Commission had said that out of $1-trillion investments envisaged during the current Plan, 50% must come from the private sector as the government faced severe resource problems. A lot of these private investments have to come in state-sector projects.

“Though the public private partnership (PPP) model has performed well in our state, public spending in infrastructure must be increased by the Centre by giving us (states) a higher share from their tax revenues,” Bihar chief minister Nitish Kumar said.

As per the devolution formula proposed by the 13th Finance Commission, 32% of central tax revenue must be shared with states. The commission, while prescribing different fiscal paths for individual states, has also set a fiscal deficit target of 3% of GDP to be achieved by 2014-15 by all states. This inevitably limits the scope for states to mobilise debt resources; so they have to look at improving revenue realisation and controlling non-Plan expenditure. The states feel, in this scenario, that central funds will be critical in infrastructure.

“Private investors haven’t shown enthusiasm in our state. Building roads remains a critical ingredient of Chhattisgarh development. The Centre has to pitch in with funds for the development of infrastructure as too much dependence on private investment in the 12th Plan won’t help my state,” Chhattisgarh additional chief secretary DS Mishra said.

States such as Chhattisgarh, Jharkhand, Orissa and parts of Bihar

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