Montek does not see fund constraints for infra devt

Seeking to allay fears of any financial constraints for development of infrastructure in the country, the Plan panel today said it expects operationalisation of at least one infrastructure debt fund (IDF) during the next fiscal.

"I don't believe that finance is a constraint. There are some proposals to set up infrastructure debt funds in the country. We expect that the one of the fund would be operational in the coming financial year," Planning Commission Deputy Chairman Montek Singh Ahluwalia said.

Finance Minister Pranab Mukherjee, in his Budget speech for 2011-12, had announced setting up of IDFs for accelerating and enhancing finances for the government’s ambitious projects in the infrastructure sector.

 

The government has said that the infrastructure sector requires an investment of $1 trillion during the 12th Five-Year Plan beginning April this year. Of this, 50% of the funding is targeted to come from the private sector.

As per the government norms an IDF may be set up either as a trust or company. While the trust based IDF (Mutual Fund) would be regulated by Sebi, an IDF set up as a company (NBFC) would be regulated by RBI.

Ahluwalia pointed out: "There are other problems with infrastructure. Right now what is constraining infrastructure is probably implementation bottlenecks, particularly, relating to environment, land acquisition and fuel supplies."

"The factual position is that we have ended the 11th Plan with much more investment in infrastructure than in 10th Plan. It is obviously short of target but we set targets very high," he added.

Citing the example of power sector where government has set a capacity addition target of 78,000 MW in the 11th Plan (2007-12), he said, "At moment, we will do about 53,000 MW in the current Plan recognising that in the 10th Plan, we did about 21,000 MW."

According to him, in every sector, except telecom, achievement would be short of target in 11th Plan, but would be much higher than the previous Five-Year Plan.

However stating telecom as an exception, he said, "There are some regulatory and legal uncertainties but I am pretty sure that those would be resolved."

He was of the view that since growth prospects in Western nations are not very high, they are expected to invest in emerging economies to get higher rate of return.

"[Annual growth in] Europe will not be more than 1.5% and it could be 2.5% in US and on the other hand emerging economies will grow somewhere between 6% and 6.5%. Thus they would go for investment where they would get higher returns," he said.