The government on Thursday sought to remove ambiguity over what constitutes ?infrastructure? by issuing a master list that comprises five broad categories and 29 sub-sectors under them. With assorted sops and concessions available for the sector, the definition of infrastructure has been a contentious issue in the country.

There is a glaring infrastructure deficit in India, which policymakers intend to address by facilitating public and private investments worth $1 trillion in the 12th Five-Year Plan next month.

The infrastructure sector enjoys various benefits like permission to sell tax-free bonds, lower withholding tax on overseas loans, easy credit from domestic banks at better interest rates, five-year tax holiday for two-, three- and four-star hotels, 100% depreciation in some sectors, viability gap funding by the government for public-private partnership projects and up to $20 million FII investment in corporate bonds. Besides, each infrastructure sub-sector has several fiscal and tax benefits available to it.

Currently, there are as many as 14 definitions of infrastructure by various ministries and regulators in banking, capital markets, insurance and pensions. This has been an impediment while framing policies to boost infrastructure investments.

The cabinet committee on infrastructure that met here on Thursday approved the list of 29 sub-sectors, including new entries like telecom towers, storm water drains and soil testing laboratories.

The list comprised five broad categories, namely transport, energy, water sanitation, communication, and social & commercial infrastructure. However, the list is still inconclusive as

financing agencies like National Highways Authority of India (NHAI) are free

to identify new areas with justification.

?It has consciously been decided not to have a rigid and inflexible listing of sub-sectors to be made universally applicable to all agencies. Each financing agency shall, therefore, be free to spell out its reasons and draw its own list of sub-sectors out of the master list with adequate justification for inclusion or non-inclusion of specific sub-sectors,? said an official press release.

?Broadly, great divergence is seen in the way the Reserve Bank of India, Securities and Exchange Board of India, World Bank, Planning Commission etc define infrastructure. This is an effort to clarify what actually forms infrastructure to avoid any confusion in the future. The master list will help in better utilisation of various benefits extended to infrastructure,? Planning Commission member BK Chaturvedi told FE.

Harmonisation of infrastructure definitions is important as India wants to double investment in infrastructure from $500 billion in the current five year plan to $1 trillion in the next, which starts from April 1, 2012. The move has been taken after Prime Minister’s Office in August 2009 asked finance ministry to urgently consider and resolve the issue of uniform definition of infrastructure.

The government has also decided to set up a committee under the department of economic affairs secretary to update the master list periodically, and has identified six characteristics which should be satisfied for inclusion of any new sub-sector in the list. The six features are natural monopoly, high sunk costs and asset specificity, non-tradability of output, non-rivalness in consumption, possibility of price exclusion, and presence of externalities.

One or more of three additional parameters should also be satisfied for inclusion of a new sub-sector, namely its importance to the scheme of economic development, its ability to contribute to human capital and the specific circumstances under which it has developed in India.

After examining the qualifications of a new sector, the committee will make recommendations to finance minister for final decision. The panel will have Planning Commission secretary, revenue secretary, chief economic adviser and representatives of RBI, Sebi, Irda and PFRDA, besides administrative ministries concerned as members.