Asserting that India's infrastructure is a mismatch with its growth ambitions, Finance Minister Arun Jaitley today proposed a sizeable Rs 70,000 crore increase in investment in the sector besides a slew of steps to spur its growth.
Presenting his maiden full-fledged Budget in Parliament, Jaitley said, "It is no secret that the major slippage in the last decade has been on the infrastructure front. Our infrastructure does not match our growth ambitions. There is a pressing need to increase public investment.".
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Jaitley also stressed on the need to revitalise the public private partnership (PPP) mode of infrastructure development.
Listing infrastructure among five major challenges he has to reckon with, Jaitley said it is a challenge for government to increase investment in the sector and with private investment in infrastructure via the PPP model still weak, public investment needs to step in, to catalyse investment.
He said, "Investment in infrastructure will go up by Rs 70,000 crore in the year 2015-16, over the year 2014-15 from the Centre's funds and resources of CPSEs."
Jaitley said the government has increased outlays on both the roads and the gross budgetary support to the Railways, by Rs 14,031 crore, and Rs 10,050 crore, respectively.
"The CAPEX of the public sector units is expected to be Rs 3,17,889 crore, an increase of approximately Rs 80,844 crore over RE 2014-15," he said.
Enunciating steps to boost the sector, the government intends to establish a National Investment and Infrastructure Fund (NIIF), and find monies to ensure an annual flow of Rs 20,000 crore to it.
This, he said, will enable the Trust to raise debt, and in turn, invest as equity, in infrastructure finance companies such as the IRFC and NHB and infrastructure finance companies in turn can then leverage this extra equity, many fold.
He said permitting tax free infrastructure bonds for projects in rail, road and irrigation sectors is also on the anvil.
On public private partnership, he said, "The PPP mode of infrastructure development has to be revisited, and revitalised. The major issue involved is re-balancing of risk."
"In infrastructure projects, the sovereign will have to bear a major part of the risk without, of course, absorbing it entirely," he added.
To augment power sector, he said, India will set up 5 more ultra mega power projects, entailing investments of around Rs 1 lakh crore.
Pitching for corporatisation of state-run ports in the country, Jaitley said the government will encourage them to become companies.