The World Bank has also stressed the need for making the debt market work better by simplifying taxes to reduce distortions, regulating the private placement markets, supporting securitisation and simplifying and harmonising debt auction procedures. In an exhaustive report on "India : Country framework report for private partnership in infrastructure," released by the World Bank just before the recent visit of its president, Mr James D Wolfensohn, the World Bank said that if the provision of high quality, reliable and reasonably priced infrastructure services continue to be inadequate, it would be a "major drag on economic growth in India."

The expected increase in demand for infrastructure services points to the need for augmenting capacity and improving efficiency in all areas. The Expert group on the commercialisation of infrastructure projects estimates that India needs to invest $115 billion to $130 billion in infrastructure during 1996-2001 and $215 billion during 2001-06. However, it pointed out that achieving this investment would require major policy reforms.

According to this report, the full potential of the private sector to meet India's pressing infrastructure needs is largely untapped. With few exceptions (particularly in the power sector in Orissa), there has been little divestiture of existing assets. There has been some advances, as first privately financed basic telecommunication services now compete with the public sector provider and in addition to this, a total of 3,000 mw of privately financed independent power projects are now operational and private investors have been funding the construction of roads, ports and airports.

However, the report said that the productivity and efficiency improvements that private management and ownership could introduce to existing public sector service providers - under an appropriate regulatory regime and with competition when possible - would help to relieve some of the current infrastructure constraints.

The report said that though India has started restructuring government roles in power, particularly by separating operations from policy and regulations, this has occurred to a lesser extent in telecommunications and ports. In other sectors the process is incomplete or has not yet begun.

This separation of roles and the creation of independent regulatory agencies would be important where there is competition between private and public owned service providers and when there is a need to insulate tariffs from political pressure.

On telecommunications, the World bank said that the government should define relationships among the regulatory agency, policy makers and the current service providers, establish an efficient interconnection regime to spur competition and continue to rebalance prices within a more competitive environment.

As far as power sector is concerned, the World Bank has categorically said that state electricity boards (SEBs), which are an increasing financial drain on their governments, have low average tariffs, with high cross subsidies to agricultural and residential consumers. The functioning of SEBs is also marked by poor management, high levels of theft of power and a large volume of uncollected bills which had led to capacity shortages, poor system reliability and frequent blackouts.

The World Bank has called for private ownership in distribution to provide commercial incentives in a bid to reduce technical and non-technical losses. It has pointed out that independent regulatory agencies would help ensure that prices are set to correct present distortions and provide incentives to make operators more efficient.

On roads sector, the World Bank has called upon the Central and state governments to identify and prepare financially viable projects, determine how tolls fit into the overall funding of road projects (both private and public) and identify and provide for the contingent liabilities that privately financed projects imply for the public sector.

Expressing concern over the low productivity of Indian ports, the World Bank has recommended separation of statutory and operational roles at the major ports, continue to transfer operational roles to the private sector, enhance competition between ports to provide greater choice for consumers and improve the sector's institutional structure.

As far as airports arse concerned, the World Bank called upon the government to structure the proposed leasing contracts at the Mumbai, Delhi, Calcutta and Chennai airports and establish a regulator to oversee private operations under the lease.