Finance minister Arun Jaitley on Saturday proposed a `70,000-crore increase in investment in infrastructure as part of steps to spur growth in the key sector, saying it had witnessed a “major slippage” in the past decade.
Pointing to the mismatch between infrastructure and India’s growth ambitions, Jaitley said in his budget speech that the public private partnership (PPP) mode of infrastructure development would have to be revitalised.
“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," he said.
“Investment in infrastructure will go up by `70,000 crore in the year 2015-16, over the year 2014-15 from the Centre's funds and resources of CPSEs.”
The government has increased the outlay for roads and the gross budgetary support to the railways by `14,031 crore and `10,050 crore, respectively, he said.
Jaitley listed infrastructure among five major challenges he was grappling with and said public investment needs to step in to catalyse investments because private funding through the PPP model is still weak.
“The CAPEX of the public sector units is expected to be `3,17,889 crore, an increase of approximately `80,844 crore over RE 2014-15," he said.
"The PPP mode of infrastructure development has to be revisited and revitalised. The major issue involved is rebalancing 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.
Jaitley said the government will encourage state-run ports to become companies.
In the roads sector, Jaitley announced that all 1,78,000 unconnected habitations would be linked by all-weather roads. "This will require completing 1,00,000 km of roads currently under construction plus sanctioning and building another 1,00,000 km of road," he said.
Jaitley said there is a proposal to convert the existing excise duty on petrol and diesel to the extent of `4 per litre into a “Road Cess” to fund investments in roads and other infrastructure.
Besides, an additional `40,000 crore will be made available through this measure for these sectors, he said.
Outlining other steps to be taken by the government to boost infrastructure, Jaitley said a National Investment and Infrastructure Fund (NIIF) would be established. The government will ensure an annual flow of `20,000 crore to the fund, he added.
This, he said, will enable the body to raise debt, and in turn, invest as equity in infrastructure finance companies like the IRFC and NHB. Infrastructure finance companies, in turn, can leverage this extra equity, he said.
Permitting tax-free infrastructure bonds for projects in railways, road and irrigation too is on the anvil.
To augment the power sector, India will set up five ultra mega power projects with investments of around `1 lakh crore, Jaitley said.