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"We need new and innovative instruments to mobilise funds for this order of investment," Finance Minister P Chidambaram said while presenting the Budget. India met around 92 per cent of the targeted Rs 20,56,000-crore investment in infrastructure during the last Plan period, with major slippages in port and road sectors.
The fund mobilisation measures to come into effect in 2013-14 include setting up of Infrastructure Development Funds (IDFs). These will provide long-term, low-cost debt for projects and higher credit offering by India Infrastructure Finance Corp for companies willing to tap the bond market. The FM also allowed institutions to raise up to Rs 50,000 crore by issuing tax-free bonds next financial year and raised the corpus of the Rural Infrastructure Development Fund to Rs 20,000 crore. The Budget also provides Rs 5,000 crore to the National Bank for Agriculture and Rural Development for financing warehousing capacity.
The FM announced setting up of a regulatory authority for the roads sector. He said the move was aimed at addressing challenges, including contract management disputes, high construction risk and financial stress due to the long gestation periods. He said the new Cabinet Committee on Investment will take up projects stalled due to regulatory hurdles.
The Budget also provides for an investment allowance to new high-value projects, to quicken the pace of implementation. A company investing Rs 100 crore or more between April 2013 and March 2015 will be entitled to deduct an investment allowance of up to 15 per cent.
The Budget also proposed taking up two new cities -" Dholera in Maharashtra and Shendra Bidkin in Gujarat -" under the Delhi Mumbai Industrial Corridor Project. He added the government will provide additional funds for the project in 2013-14, if required. Two new industrial corridors, connecting Chennai-Bangalore and Bangalore-Mumbai, will also be taken up shortly. The Budget also promised a gas pricing policy and clearing New Exploration and Licensing Policy blocks and the five-million-tonne-a-annum Dabhol LNG terminal.
The ports sector, which managed to meet a dismal 42 per cent of investment target in the 11th Plan period, witnessed a major push. The FM announced the creation of an additional 142-million tonne (mt) cargo handling capacity -" 100 mt through the creation of two major ports in West Bengal and Andhra Pradesh, and 42 mt through the setting up of an outer harbour in Tamil Nadu at an estimated Rs 7,500 crore.
Chidambaram also said the government will set up a Rs 1,840 crore power transmission line connecting Srinagar with Leh next financial year. He urged state governments to adopt the financial restructuring plan for ailing electricity distribution companies. It also focused on selecting barge operators through competitive bidding to transport bulk cargo on national waterways.
Experts gave thumbs-up to the Budgetary provisions but pointed out the lacunae in the roadmap for growth. "The Budget seems to be focused more on addressing short-term challenges and issues hurting the existing projects. While it has incentives and concessions for financing, it misses out on big-ticket reforms. No clear push has been provided for increasing private participation in airports or railways for instance," said Samir Kanabar, tax partner, infrastructure, Ernst & Young.
