Budget 2015: Rs 70,000 crore push to infrastructure sector
Listing infrastructure among the five major challenges he has to reckon with, Jaitley said with private investment in infrastructure via the public private partnership (PPP) model still weak, public investment needs to step in to catalyse investment.
A big push for infrastructure sector with a hefty 70,000 crore increase in investment, that's what Finance Minister Arun Jaitley on Saturday announced to pump the economy even though it means postponing by a year to 2017-18 achieving the stiff fiscal deficit target of 3 per cent. "It is no secret that the major slippage in the last decade has been on the infrastructure front. Our infrastructure does not match our growth ambitions.
There is a pressing need to increase public investment," the finance minister said while presenting the Budget.
Listing infrastructure among the five major challenges he has to reckon with, Jaitley said with private investment in infrastructure via the public private partnership (PPP) model still weak, public investment needs to step in to catalyse investment. He also stressed on the need to revitalise the PPP mode of infrastructure development.
The minister said investment in infrastructure will go up by 70,000 crore a year 2015-16 over year 2014-15 from the Centre's funds and resources of Central public sector enterprises.
Jaitley said the government has increased outlays on both the roads and the gross budgetary support to the Railways by 14,031 crore and 10,050 crore, respectively.
The capital expenditure of the public sector units is expected to be 3,17,889 crore, an increase of approximately 80,844 crore over RE 2014-15, he said.
The government also plans to establish a National Investment and Infrastructure Fund (NIIF), and find money to ensure an annual flow of 20,000 crore to it. This, he said, will enable the trust to raise debt and invest in equity of infrastructure finance companies such as the IRFC and NHB and the companies in turn can then leverage this extra equity manifold.
He said permitting tax free infrastructure bonds for projects in rail, road and irrigation sectors is also on the anvil. On public private partnership, the minister said, "The PPP mode of infrastructure development has to be revisited and revitalised. The major issue involved is rebalancing of risk. In infrastructure projects, the sovereign will have to bear a major part of the risk without, of course, absorbing it entirely."
To augment the power generation capacity in the country, Jaitley announced five new ultra mega power projects each of 4,000 MW in the plug-and-play mode. The minister stated that all clearances and linkages will be in place before each project is awarded through a transparent auction system.
"This will unlock investments to the tune of 1 lakh crore," he explained. Jaitley added that the government would also consider this plug-and-play mode for other infrastructure projects as roads, ports, railway lines and airports. To augment power sector, he said, India will set up 5 more ultra mega power projects, entailing investments of around 1 lakh crore.
Pitching for corporatisation of state-run ports in the country, Jaitley disclosed that the government will encourage them to become companies.
"Ports need to attract investment as well as leverage the huge land resource lying unused and, to enable us to do so, ports in the public sector will be encouraged to corporatise and become companies under the Companies Act," the minister explained.
India has 12 major ports including Kandla, Mumbai, JNPT, Marmugao, New Mangalore, Cochin, Chennai, Visakhapatnam, Paradip and Kolkata which handle 61 per cent of the country's cargo.
For the roads sector, Jaitley announced connecting each of the 1,78,000 unconnected habitations by all-weather roads.
This will require completing 1,00,000 km of roads currently under construction plus sanctioning and building another 1,00,000 km of roads, he said. Jaitley also said that there is a proposal for conversion of existing excise duty on petrol and diesel to the extent of 4 per litre into road cess to fund investment in roads and railways.
"An additional 40,000 crore will be made available through this measure for these sectors," he said.
He further said that the Northeast region has been accorded priority in the development process by two visits of Prime Minister and launch of important infrastructure projects.