'Enforce regulatory framework for infrastructure growth'

Economic Survey calls for enforcing user charges and a regulatory framework that fosters competition to ensure effective delivery of infrastructure services.

business Updated: Feb 27, 2003 13:37 IST

Setting the agenda for providing high growth enabling infrastructure, the Economic Survey has called for enforcing user charges and a regulatory framework that fosters competition to ensure effective delivery of infrastructure services.

Noting healthy contributions from all segments in the handsome 5.4 per cent growth rate registered by infrastructure sector in April-December 2002, the Survey said success of policies must be judged by the quality, quantity and prices that end-users are charged for these services, and comparisons with global standards.

Over a decade of focus on infrastructure policy has led to substantial progress in some areas and broad outlines now emerging are to "involve new institutional arrangements, well enforced user charges, exploit new technologies, private sector production, and a regulatory framework that fosters competition," the Survey said.

Underscoring the need for creating a sound regulatory framework, it said: "in areas like rural infrastructure, where cost recovery is innately difficult, there is a greater role of government to foster infrastructure provision even if it is not directly profitable."

While telecom has been a success story, the Rs 58,000 crore National Highway Development Project was making rapid progress. However, Railways still require substantial reforms in its functioning and establishing an institutional mechanism to cut cost, it said.

Generation of electricity not being a problem, the key bottleneck in providing power for all lay in enforcement of user charges in distribution, the Survey said.

The path-ahead for high speed road infrastructure, it said, would be the successful completion of National Highway Development Project -- connecting four corners with 4/6 lane highways -- on time and on budget.

"Some new links will need to be built between cities, and some four-lane highways will need to be converted into six-lane expressways."

That the performance of ports in India still lags far behind the standards seen in Singapore and Hong Kong, the key to success would be establishing framework through which there was competition between multiple operators in a given port and competition between ports, the Survey said.

Calling for rapid reforms in power distribution through enforcement of user charges, "it can be a normal private industry, provided the downstream buyers are operating in a sound institutional framework.

"Once reforms in transmission and distribution are in place, it will not be difficult to elicit private investment in generation."

The civil aviation sector has made significant strides in coping with the growth of international and domestic traffic. While success has been achieved in developing green-field airport in the country, restructuring of four metro airports has been approved, it added.

First Published: Feb 27, 2003 13:37 IST