Rakesh Mohan panel to evolve infrastructure funding strategy

The government has set up a high-level panel to evolve an enabling policy framework for $1-trillion investment in infrastructure during the 12th Five-Year Plan, which starts April 2012. In order to upgrade infrastructure facilities in the country, the Centre aims to double investments in 10 sectors, including transport, power, telecommunications, and oil and gas.

The panel will be chaired by former deputy governor of Reserve Bank of India Rakesh Mohan. Mohan, who has been given a rank of minister of state, is also working on a comprehensive policy on transport. Other members of the committee are secretaries of the department of economic affairs and department of financial services, and chairmen of the Insurance Regulatory and Development Authority and Pension Fund Regulatory and Development Authority. The absence of market regulator Sebi in the panel is, however, conspicuous.

Besides, the panel will include RBI deputy governor, and chief executives of State Bank of India, Life Insurance Corporation, Power Finance Corporation, ICICI Bank and Infrastructure Development Finance Company Ltd.

Incidentally, actual investments during past three years of the current five year plan has been below expectations due to policy logjams and inter-ministerial differences. According to government data, there is a shortage of 19% in infra investment in these three years as against the projection, telecommunications being an exception. The lower realisation has led to a major reduction in the investment figures for the entire period. The maximum cut of 50% has been made in the ports sector. The committee ? named High-Level Committee on Financing of Infrastructure ? was formed by a November 15-dated order of Cabinet secretary K M Chandrasekhar.

The panel will identify areas to be financed by the Centre, states, public sector undertakings and private firms. It will suggest ways to enable the required flow of private investments including both domestic and foreign, and channelise public savings to infrastructure. It will also facilitate the removal of regulatory impediments to investment. The report will be submitted in 18 months, an official statement of Planning Commission said on Thursday. The policy framework has been playing a truant to infrastructure growth in the country. Major ports are unable to get the required private interest in development of terminals as the current policy authorises independent Tariff Authority of Major Ports to fix port tariff, which in some cases restricts the revenues for the concessionaire.

However, the government wants to increase private participation in the 12th Plan to 50% of the projected investment of $1 trillion. At present, private investment is between 30% to 35%.

Railway Board chairman and secretaries in the ministries of power, road transport and highways, urban development, petroleum and natural gas, telecom and water resources would be special invitees. The convener of the panel will be Gajendra Haldea, adviser to Planning Commission deputy chairman Montek Singh Ahluwalia.