Stepping up production and investment in key infrastructure sectors is UPA-II?s Priority No.1 in its efforts to revive the economy. The Cabinet secretariat and the finance ministry have taken upon themselves to coordinate policy action to unclog the investment pipeline in coal, mining, oil and gas, power, ports and roads, government officials told FE. The move comes even as Thursday?s industrial production data showed a 1.8% annual fall in June, dragged down by a pronounced slump in manufacturing.
Finance minister P Chidambaram has decided to hold weekly meetings with secretaries of key ministries like coal, environment, power, petroleum to work on ways to remove bottlenecks. The minister has also asked secretaries in his own ministry to come up with ?actionable plans? to implement sentiment-boosting measures outlined in his recent press statement. Chidambaram?s initiatives closely follow the recent creation of a project clearance board led by the Cabinet secretary, which the prime minister?s office (PMO) said would work as a single-window for clearing projects above R1,000 crore and meet every month.
A senior official requesting not to be named told FE that the finance minister will shortly start holding meeting with secretaries of other ministries. He will initiate regular follow-up action with various ministries on major projects taken up by the project clearance board, the sources added.
The biggest hurdle to speedy implementation of public-private partnership projects are delays faced by implementing agencies and private firms (concessionaires) in obtaining security-related, environmental and land clearances. The Planning Commission has acknowledged that achieving $1-trillion infrastructure investment target for the 12th Plan will be near impossible. The commission is also likely to revise downwards the growth target for the 12th Five Year Plan, while deputy chairman Montek Singh Ahluwalia said growth this year would be less than 6%. Citing sagging investment climate, global banking major Citi and brokerage firm CLSA have cut their estimates of India?s GDP growth for the current fiscal to 5.4% and 5.5% respectively.
The return of Chidambaram to the finance ministry whose previous stint coincided with India?s strongest growth in the past two decades, has raised hopes among all stakeholders and markets cheered his recent statement which spoke of fiscal consolidation and easing the burden of high interest rates on investors and consumers.
A senior official said the press statement has been marked to all departments of the finance ministry. The departments have been asked to work out action plans in line with the statement.
Chidambaram?s prescriptions for reversing the moderate growth of last two years include tackling high inflation, possible cut in interest rates, a progressive tax regime and financial consolidation through modification or finetuning of policies.
He also noted that some sectors such as petroleum, electricity and textiles were under stress adding the government would find practical solutions to the problems that impeded higher production or output in the coal, mining, petroleum, power, road transport, railway and port sectors.