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Core sector growth plummets by 1.9%: Survey

"There is a potential for Public Private Partnership to contribute to help more and bridge the infrastructure gap in India," the Survey pointed out.

india Updated: Feb 27, 2006 15:11 IST
Press Trust of India
Press Trust of India

With India's roads, airport and port sectors requiring a whopping Rs 2,60,000 crore investment in the next six years, the government should frame conducive policies for the infrastructure sector, whose growth dipped to 4.5 per cent from 6.4 per cent last year, the Economic Survey said.

Saying that India's growth prospects are intricately intertwined with the rapid development of physical infrastructure, the Economic Survey 2005-06 suggested that speedy provision of quality infrastructure through appropriate policy stimulus constitutes the first and foremost component of this challenge.

The Prime Minister's Committee on Infrastructure has estimated that the nation would require investment to the tune of Rs 2,62,000 crore by 2012. Of the total amount, investment in national highways was envisaged to be Rs 1,72,000 crores, Rs 40,000 crores for airports and Rs 50,000 crores for development of ports.

"A substantial share of this investment is expected to come from the private sector. It has been estimated that India has the potential to absorb 150 billion dollars of FDI in the next five years in the infrastructure alone," according to the Survey.

"There is a potential for Public Private Partnership to contribute to help more and bridge the infrastructure gap in India," the Survey pointed out.

The suggestion by various empirical studies that given its institutional strengths, India's per capita income should be four to five times of what it is now, portends a bright outlook for growth over the medium term, according to the Survey.

"The multi-pronged challenge lies in providing an appropriate policy framework to harness the dormant talent-pool of Indian workforce and entrepreneurs to position the economy on a sustained high-growth trajectory," the Survey said.

It held slowdown in mining sector, particularly coal, responsible for the retarded growth of the infrastructure sector as coal met about 60 per cent of the country's commercial primary energy demand and generates 70 per cent of all power.

"There is a need for further liberalisation, including allowing an associated coal mining company engaged in captive mining to sell excess coal to any other, besides allocating captive mines through price-based auctions and liberalisation of FDI restrictions in joint ventures in captive mining," the Survey observed.

It said investment in the port sector continued to take place at a substantial scale. These will be further spurred by institutional reforms in the coming years.

As of now, 13 private projects with a capacity addition of 47.L60 MTPA and an investment of about Rs 2,662 crore have either been completed or operationlised, while 24 others with a capacity addition of around 100.68 MTPA and an investment of Rs 7,910 crore were at various stages of evaluation and implementation, it observed.

The Survey mooted that in terms of financing patterns, the foundation of urban infrastructure has to be user charges. "It is possible for urban institutions to access resources from the capital markets to finance a large portion of urban capital expenditure when it can be serviced through user charges."

The government has launched the Jawaharlal Nehru National Urban Renewal Mission, which aims at facilitating improvement in the existing service levels in the cities in a financially sustainable manner.

The government has made a provision of Rs 50,000 crore as central assistance to the JNNURM for a period of seven years beginning 2005-06.

Besides, funds for the identified cities would be released to the designated state nodal agency, which in turn would leverage to the extent feasible, additional resoures from the financlai institutions or capital markets.

First Published: Feb 27, 2006 15:11 IST