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Remove hurdles to infra growth

india Updated: Feb 27, 2013 20:44 IST
HT Correspondent

Calling for a high level of investment in infrastructure, the Economic Survey for 2012-13 cited bottlenecks in the sector as one of the main reasons for subdued industrial performance in the country.

Stating that India needs "urgent attention" on issues related to infrastructure, the survey tabled by finance minister P Chidambaram in Parliament on Wednesday stated that a high level of investment in infrastructure sector is essential for the overall revival of investment climate, which may finally lead to sustainable growth in an economy.

However, the survey said there is a need to address sector-specific issues over the medium to long term horizon in India.

The survey noted that even the best of Indian ports do not have state-of-the-art technology as in Singapore and Shanghai. Similarly, there is an overall shortage of power in the country.

"There is an overall shortage of power both in terms of energy deficit and peak shortage. At present, overall energy deficit is about 8.6% and peak shortage of power is about 9.0%," the survey said.

As India is not well-endowed with energy resources, except coal, the survey said that the existing policy distortions makes management of demand and supply more difficult.

Accordingly the short-term action needed to remove impediments for implementation of projects in infrastructure, especially in the area of energy, includes ensuring fuel supply to power stations, financial restructuring of discoms, and clarity in terms of the NELP.

At the same time, it said that the long-term strategy should focus on issues like coal production, petroleum price distortion, natural gas pricing, and effective management of urbanisation.

The survey also noted that "of late, financing of road projects has run into difficulty as leveraged companies are unable to raise more debt in the absence of fresh equity."

"Exit route needs to be eased so that promoters can sell equity positions after construction, passing on all benefits and responsibilities to entities that step in," it said.