Finance Minister Pranab Mukherjee today asked states to expedite implementation of externally- aided projects so that the benefits of development could reach the poor and the country's image is enhanced abroad.
"(An)...Area of primary concern is a slow progress of externally-aided projects. Effective implementation of these projects not only benefits the areas of projects’ locations, but also enhances our image abroad and with the multilateral financial agencies," he said at a conference of state finance secretaries.
Several multilateral lending agencies like the World Bank and the Asian Development Bank (ADB) have been stressing on a speedier implementation of the aided-projects. India is estimated to have paid over Rs 700 crore as commitment charges to such agencies during the five-year period ending 2008-09.
The Finance Minister also asked the states to prepare the necessary groundwork for implementation of infrastructure projects in the Public Private Partnership (PPP) mode.
"There is need to create an enabling environment by way of a suitable policy framework and create a shelf of PPP projects which could be taken up for financing".
The state governments, he said, should consider the PPP model for implementing various infrastructure projects.
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Pointing out that lack of adequate infrastructure was the bane of the Indian economy, Mukherjee said the Eleventh Plan target of raising investment in this sector to 9 per cent of the GDP by 2011-12 required extensive use of the PPP mode for implementing projects.
"As the huge investment requirements for infrastructure development cannot be met entirely from budgetary resources of both the Centre and the states, therefore, the PPP model of infrastructure development is being encouraged", he said.
Mukherjee also made a case for reverting to the path of fiscal prudence as the global economy has started showing initial signs of recovery.
The imperatives of addressing the economic crisis, he added, "should not make us ignore the longer-term agenda of addressing fiscal stability and providing welfare to our people.
"It is expected that once the global economy begins to recover, the state governments would re-affirm their commitment to fiscal responsibility and be back onto the path of fiscal consolidation," he said.
On financial inclusion, Mukherjee said, states need to provide infrastructural facilities, connectivity and a secure environment to enable the banks to provide banking facilities in unbanked and under-banked areas.
Expressing concern over low credit-deposit ratios in certain states, Mukherjee said, it was imperative that the state governments should create an enabling environment for banks to lend and to recover their dues.
The forum of State Level Bankers’ Committee, he added, should be used by the state governments to improve the credit-deposit ratios and ensure effective implementation of government schemes and initiatives.
The states where the participation in the SLBCs is high have witnessed significant improvement in the flow of funds from the banking sector, he said.
The meeting is being attended also by Minister of State for Finance Namo Narayan Meena, Finance Secretary Ashok Chawla and representatives from finance departments of the states and Union Territories (UTs).