FM unhappy with states over infrastructure

Finance Minister P Chidambaram today said lack of initiative from the states was limiting the government ability to invest in infrastructure.

"A major issue in infrastructure development is that some states are not sharing responsibility, thereby reducing the room for the Centre to invest in basic infrastructure," Chidambaram said during a meeting of the consultative committee of finance.

A background paper prepared for the consultative meeting also pointed out the need for streamlining clearances to ensure better coordination between the Centre and the states.

Other issues in the infrastructure sector included ensuring a seamless regulatory framework balancing the interests of investors and users, the paper said.

It also said there was a need for generating more funds for public investment in infrastructure and delivering a level-playing field for new infrastructure providers.

Chidambaram said the country required significant resources to fund infrastructure development, for which budgetary allocations were insufficient. To bridge this gap, the government was encouraging public-private partnership.

It has been estimated that India has a potential to absorb $150 billion of foreign investment in infrastructure in the next few years. According to estimates by the Prime Minister's Committee on Infrastructure, by 2012 an investment of Rs 1,72,000 crore is required in the national highways, Rs 40,000 crore in airports and Rs 50,000 crore in the ports sector.

The finance minister said measures to encourage public-private partnerships include setting up of India Infrastructure Finance Company for meeting long-term financing requirements of potential investors and providing viability gap funding.

In addition, ministries of shipping, road transport and highways have been asked to come up with model concession agreements to attract private companies to build-operate projects in roads and ports.