Can the lakhs of crores of rupees being put into insurance policies by people be used to build roads, ports, power plants, airports and other key infrastructure facilities?
The talk has been around for a decade, but Pranab Mukherjee’s first budget as a post-reform finance minister could make a big headway, with consensus built up on these facilities as a growth driver for the sagging economy.
The government’s is aiming to double the level of investment in roads, ports, airports, and power sector to about 9 per cent of the gross domestic product (GDP) in the next five years.
“The much needed push to the infrastructure sector would lead to creation of direct and indirect employment and will also help the revival of industries including steel, cement and allied sectors of the economy,” OB Raju, managing director, GMR Highways Limited said.
The measures would include making it attractive for banks to lend to long gestation infrastructure projects, development of a deeper bond market bundled with tax breaks and incentivisation of insurance companies to park funds in infrastructure firms through debt instruments.
To make cheaper capital available government is contemplating a dedicated Road Finance Corporation on lines of Power Finance Corporation that would fund long-gestation highway projects.
For development of 35 non-metro airports the Airports Authority of India (AAI) is looking to float a bond issue of Rs 5,000 crore which could be announced in the budget.
The government is likely to allocate approximately Rs 8,000 crore for national highway projects.
Changes in the bidding procedures for road projects to speed them up are also in the offing.