The finance ministry is likely to come out with a package on fast tracking infrastructure projects to reverse investment gloom in the economy.
Finance Minister P Chidambaram will shortly hold consultations with infrastructure ministries to address the issues confronting the sector. Only after the meeting, exact nature of the package could be known, officials said.
“The meeting will be held shortly. Depending on consultations, a package could be announced,” an official told Business Standard.
The official said the package could entail easing of procedures as well as some form of tax relief.
| TROUBLESHOOTING FinMin said the package could entail easing of procedures as well as some form of tax relief |
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The finance minister recently told bankers about issues that inhibit fuel-supply agreements (FSAs) between power companies and Coal India Ltd (CIL) as well as land acquisition problems coming in the way of reviving the infrastructure sector.
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At a recent meeting with public sector banks, he also referred to government entities like National Highway Authority of India and state electricity boards not making payments to contractors on time.
He said low sentiments are only one of the problems in keeping investment cycle down. Sentiments will change for better if these problems in infrastructure industry are sorted out.
Confederation of Indian Industry Director General Chandrajit Banerjee said more than any tax relief, the bigger issues is debt pile up of infrastructure projects in public-private-partnership mode. The debt has piled up because of delay in these projects because of various clearances.
He wanted fast tracking of 40 large such projects costing above Rs 1,000 crore each and debt-restructuring of these projects.
The Prime Minister's Economic Advisory Council (PMEAC) pointed out that currently, clearances for projects are being taken in ministerial silos. "In case of high-impact infrastructure projects, an integrated view needs to be taken," its report on Economic Outlook for 2012-13 said.
It wanted a Cabinet Committee comprising ministers in charge of departments concerned to take an integrated view on these projects.
After Prime Minister Manmohan Singh's intervention, 29 FSAs are being signed between power companies and CIL. However, issues like pricing and penalty are yet to be decided.
Earlier last week, Economic Affairs Secretary Arvind Mayaram and Financial Services Secretary D K Mittal had a meeting with officials of infrastructure ministries to find ways for delayed public private partnership projects costing over Rs 1,000 crore. Chidambaram recently said he intended to find problems that impede higher production in the coal, mining, petroleum, power, road transport, railway and port sectors. The Cabinet Committee on Economic Affairs will examine the issues affecting each sector and take decisions that will lead to quantitative growth in these sectors.
Coal production has significantly reversed its earlier declining trend. Its production rose by 6.4 per cent in the first quarter of this fiscal year-on-year against a mere 0.3 per cent in the corresponding period of last fiscal.
On the other hand, crude oil production contracted 0.5 per cent over a growth of 9.5 per cent during the period, while natural gas production fell 11.1 per cent against 10.2 per cent.
Even as overall industrial production declined 0.1 per cent in the first quarter, electricity generation rose 6.4 per cent. However, failure of power grid last month amply demonstrated shortcomings in the sector.