Govt forms high-level infra finance committee

The 16-member panel will have representatives from various financial sectors.

Recognising the need for a policy to enable flow of resources for infrastructure, the Centre has constituted a High-Level Committee on Financing of Infrastructure under former Reserve Bank of India (RBI) deputy governor Rakesh Mohan. Mohan will be given the status of a minister of state in an honourary capacity.

The committee will assess the investment to be made by the Centre, the state governments, public sector undertakings (PSUs) and the private sector in the 10 physical infrastructure sectors during the Twelfth Five Year Plan (2012-17).

The 16-member committee will have representatives from banks, the Pension Fund Regulatory and Development Authority, Insurance Regulatory and Development Authority (Irda) and Life Insurance Corporation of India (LIC), among others.

Mohan earlier headed a committee that recommended in 1996 that the sector get a prioritised focus. He also chaired a committee on railway financing. Currently, he heads the National Transport Development Policy Committee that will set a multi-modal strategy to meet the country’s transport needs for the next 20 years.

The committee, serviced by the Planning Commission and the Infrastructure Development Finance Company (IDFC), will sketch the government’s role in developing the capital markets for channelling long-term savings for projects, including fostering of appropriate institutional arrangements. Its function will also include examining the role of international capital flows in infrastructure financing and development, assessing the nature of projects likely to receive such capital and consider the level of financing that can be obtained in a sustainable manner.

The committee will also identify any regulatory or legal impediments constraining private investment in infrastructure and make specific recommendations to facilitate their removal.

The step is in line with the government assigning ‘high priority’ status to creation of physical infrastructure for sustaining the overall growth momentum. For the Twelfth Plan, the likely target for infrastructure investment will be Rs 41 lakh crore compared to Rs 20.5 lakh crore in the ongoing Eleventh Plan period.

Of the total investment in the Twelfth Plan, half is expected to come from the private sector and a significant portion from PSUs through market borrowings.

Earlier this year, the Planning Commission had constituted a committee under Deepak Parekh to review the proposal to set up Rs 50,000-crore infrastructure debt fund to meet the long-term needs of projects implemented by public-private partnerships. The committee had suggested amendments in existing laws to enable tapping of long-term pension funds.