Private role for core sector vital: FM

Finance Minister P Chidambaram today said that the government is taking all possible steps to enhance public and private investment for promoting economic growth and poverty reduction in the country.

Though the government is committed to promoting Public Private Partnerships (PPP) for infrastructure development through the viability gap funding facility, Chidambaram said that to qualify for this the projects must be implemented with at least 40 per cent private equity in the following sectors: roads, railways, sea-ports, airports, power, water supply, sewerage and solid waste disposal in urban areas and international convention centres.

Chairing the first meeting of the Parliamentary Consultative Committee attached to the Finance Ministry, Chidambaram emphasised that both the Government and the public sector must save and public expenditure should be reduced in order to free resources for investment.

He said an increase in the off take of non-food credit in the current year was indicative of the substantial increase in investment. Non-food credit upto October, 2004 amounted to Rs.1,11,058 crore compared to Rs46, 546 crore in the corresponding period last year.

The minister pointd out that while bank credit was important for investment in different sectors, the Government as owner of the public sector banks should only play an indicative role.

"In the past many banks had become sick and unviable because of directed lending. Only after such requirements were lifted have banks emerged stronger and more successful and we have to make them still stronger," he said.

He disclosed that institutional credit to the agricultural sector was likely to exceed the target fixed for this year. The target of providing loans to 100 new farmers per branch in the agricultural sector would also be achieved.

On the infrastructure front, the finance minister admitted that though there had been some bottlenecks in ports, particularly at JNPT this was because of a 35 per cent growth in imports and a 25 per cent growth in exports during the current year.

The highways sector which was slack in the first quarter was now picking up. The slow growth was due to delays in awarding contracts in the first quarter due to th e electoral code of conduct which was in place at the time, he clarified.

The finance minister is scheduled to meet chief commissioners of customs, excise and income tax this week to review the mid-year revenue collections.

The minister is also scheduled to meet state finance ministers on Tuesday to discuss the draft bill on service tax. The meeting on service tax will coincide with the meeting of the empowered committee of state finance ministers on value added tax, which is to be in place by April, 2005.

The meeting on service tax will seek to forge a consensus on issues such as having a negative list and earmarking some service taxes purely for the states.

Customs duty collection during October stood at Rs 5,525.69 crore as compared to Rs 4,625.04 crore during October, 2003, an increase of over 19 per cent while excise duty realisation grew by over 9 per cent during October at Rs 8,191.22 crore as against Rs 7,476.51 crore.

Service tax collection during October was Rs1,030.33 crore as compared to Rs 890.89 crore during October, 2003 showing an increase of 15.65 per cent.

The collection of Customs duty from April to October, was Rs 30,742.60 crore as compared to Rs 27,793.00 crore during the corresponding period of financial year 2003-2004 showing an increase of 10.61 per cent while the collection of excise duty during the same period stood at Rs 52,685.36 crore against Rs 47,885.66 crore during 2003-04 showing an increase of 10 per cent.

He disclosed that institutional credit to agricultural sector was likely to exceed the target fixed for this year. The target of providing loans to 100 new farmers per branch in the agricultural sector would also be achieved.

On the infrastructure front, the Finance Minister admitted that though there had been some bottlenecks in ports, particularly at JNPT this was because of a 35 per cent growth in imports and a 25 per cent growth in exports in the current year.

The highways sector which was slack in the first quarter was now picking up. The slack was because of the delays in awarding contracts in the first quarter due to the operation of the electoral code of conduct, he clarified.

Responding to queries regarding utilization of foreign exchange reserves, Chidambaram assured the members that a final decision would be taken only in consultation with the Prime Minister.

Minister of State for Finance, Shri S.S. Palanimanickam and senior officials from the Finance Ministry were also present at the meeting.

The Members who attended the meeting included L. Rajagopal, R. Prabhu, Rameshwar Oraon, K.V. Thangka Balu, M. Sreenivasulu Reddy, M. Ramadass, D.K. Adikesavulu, Mohan Rawale and Dr. C. Krishnan from Lok Sabha and Murli Deora, Gireesh Kumar Sanghi, Jairam Ramesh and M. Rajasekara Murthy from Rajya Sabha.