CII is of the view that infrastructure and housing are sectors that have the capacity to demonstrate significant growth and efforts must be made to realise this potential. It must be realised that infrastructure of all sorts is a crucial driver of growth and without much development in the sector, the country would not be able to achieve a growth rate of 7-8 per cent, said CII.

CII said that norms for FDI in urban infrastructure and property development must be liberalised to a great extent and FDI inflows facilitated and encou-raged.

CII has suggested a seven-point agenda which should be put in place for attracting private sector and FDI participation in urban infrastructure.The Rakesh Mohan committee had estimated that Rs 25,000 crore was required annually for the next 10 years to fund urban infrastructure development. In the Ninth Five Year Plan,only Rs 12,000 crore per annum has been sanctioned for urban infrastructure.

CII has suggested that urban infrastructure should be commercialised. This would mean that wherever possible, tariffs and user charges must be brought in line with the cost of provision. CII believes that people have to pay for improvement in the quality of city services and this would encourage efficient use of resources and thus make the sector attractive for potential private players.

Long-term lending for infrastructure financing needs to be facilitated. Availability of funds from multilateral and bilateral agencies and other long-term funds in the domestic market will have to be utilised for lending to the urban infrastructure sector. CII said a transparent regulatory authority with strong powers of implementation should be put in place to ensure that decisions relating to fixing of tariffs, quality of services are fair and timely.

The definition of infrastructure should be enlarged to include urban infrastructure andhousing so that the problem of long-term funds now affecting these sectors could be resolved to some extent.

The policy framework for private sector and foreign investment should be clearly defined and transparent. The concept of BOO (build-own-operate), BOT (build-operate-transfer) and BOOT (build-own-operate-transfer) should be adopted, said CII.

Lastly, institutional sources of capital such as pension funds, insurance and provident finds should be made available for financing urban infrastructure projects, said CII. According to CII, the major problem facing private and foreign investors is the lack of a clear policy framework and operational guidelines, causing uncertainty and a lack of investor confidence.