Prime Minister Manmohan Singh on Saturday assured a new investor friendly policy soon to meet India's requirement of around $320 billion for infrastructure development, particularly in railways, roads, port and power, over the next six years.
"In the coming weeks and months we will finalise the framework for the remaining areas of infrastructure - like policy, regulatory and institutional framework," the prime minister told a seminar on infrastructure here.
The new policy, he added, would ensure competitiveness and complete transparency in the process of inviting bids and award of contracts, besides putting in place a proper regulatory framework and dispute settlement mechanism.
Convened by the Planning Commission, the daylong conference was attended by Finance Minister P Chidambaram, Railway Minister Lalu Prasad, Commerce Minister Kamal Nath, Planning Commission Deputy Chairman Montek Singh Ahluwalia and ministerial representatives from all states.
The prime minister said while India's economic growth has been averaging in excess of 8.0 percent "the growth has not been without limitations. Many marginalised sections of our society and large segments of our farming community have not benefited from the growth process. We, therefore, need a faster and more inclusive growth process".
He said to achieve a higher growth of 9-10 percent, additional sustained efforts to boost agricultural and manufacturing growth would be required.
"Our growth potential will be realised only if we can ensure that our infrastructure does not become a severe and critical handicap," Manmohan Singh said.
The Planning Commission has estimated that investment in infrastructure - defined broadly to include road, rail, air and water transport, electric power, telecommunications, water supply and irrigation - will need about Rs.14.5 trillion or $320 billion during the 11th Five Year Plan (2007-12) period.
The prime minister, during an interaction with the industry leaders later, clarified that India is not looking overseas for meeting its investment needs.
With savings by Indians constituting 28-30 percent of GDP "bulk of the funds will continue to be generated domestically", he said.
Foreseeing a larger role for private participation, particularly through public private partnerships (PPP), he said there is need to "lay down a policy framework that assures a fair return for investors provided they attain reasonable levels of efficiency. But the policy must also protect the interests of users, especially the poor".
The policy framework being mulled would seek to ensure tariffs and service quality are regulated and consumer access protected.
Since a large part of investor risk stems from uncertainty about government actions, the prime minister underlined the need for clarity in the policy and regulatory framework regarding private participation in any area.
Addressing a long standing demand of the industry, the prime minister stressed: "There must also be assurance of a level playing field amongst competing suppliers, a consideration which becomes very important when private suppliers operate in competition with public sector suppliers as is the case in telecommunications, air travel, the power sector and railways."
To ensure this, the prime minister advised establishment of independent regulatory bodies with an appeal mechanism.
He suggested an alternative to independent regulation could be "regulation through contracts which transparently detail the rights and obligations of all parties and rely on robust competitive bidding for award of concessions".
"In future, PPP projects should be awarded on the basis of transparent competitive bidding with a standard concession agreement to the extent possible," the prime minister said.
Finance Minister P Chidambaram said the Indian economy grew by over eight percent in the second quarter of the current fiscal year - maintaining the high growth of 8.9 percent in the first quarter.
"Unless investment grows at the same pace, it will not be possible to sustain the economic growth," said Chidambaram.