In a bid to boost investment in the infrastructure sector at a time when both the public and private sector are hard pressed for funds, the government is considering a proposal to provide more funds to the India Infrastructure Finance Committee Ltd (IIFCL). Finance minister P Chidambaram said on Tuesday, ?Planning commission deputy chairman has asked that more funds be given to the infrastructure sector, especially to IIFCL.?
The matter was taken up at the first meeting of the apex group headed by Prime Minister Manmohan Singh on Monday. “The proposal is being studied by the Reserve Bank of India , the departments of financial services and economic affairs,” Chidambaram said. The global liquidity squeeze has impacted investments in infrastructure projects with bidders pulling out from highway projects. The PM has stressed on the need for increased spending in infrastructure as an economic stimulus, but has also said that finding sources of finance for the country?s ambitious $500 billion plan to upgrade infrastructure in the next five years would be a challenge in the current global turmoil.
?By and large, the PM is satisfied with the speed of the Reserve Bank of India and advised the Governor to keep a close and constant vigil and act appropriately,” Chidambaram said. The current inflation level was also reviewed at the meeting and it was felt that inflation levels will fall further.
The government will continue to keep a close watch on the liquidity situation as well as credit delivery, the FM assured. ?I am confident that whatever measures have to be taken, will be taken,? he said.
“The PM also pointed out that a fiscal stimulus has also been provided in the form of the supplementary budget which provides Rs 1.5 lakh crore cash expenditure over and above the Rs 6.5 lakh crore in the main budget,” Chidambaram said. He said he has advised the expenditure secretary to keep in mind the additional expenditure requirements of ministries and departments while drawing revised estimates.
“If the departments and ministries are able to spend the money allocated to them, and they still have capacities to spend more money by March 31, 2009, we are willing to look into their requirements,” he said. The apex group meeting also discussed problems being faced by exporters on account of the contraction in demand as well as the depreciating rupee.
Apart from Singh and Chidambaram, commerce and industry minister Kamal Nath, deputy chairman of the planning commission Montek Singh Ahluwalia and RBI governor Duvvuri Subbarao also attended the meeting.