Giving a thumbs up to the public private partnership (PPP) mode, the Finance Minister Arun Jaitley while presenting the maiden Budget of the NDA Government on Thursday, clearly laid emphasis on expediting big ticket infrastructure projects in order to revive growth.
He announced setting up of a body named 3P India with a corpus of `500 crore, which will help in providing mainstream support to PPP projects.
Asserting that lack of infrastructure will not be allowed to hit growth, Jaitley said, “the country is in no mood to suffer (due to) lack of infrastructure and apathetic governance. The task before me today is very challenging because we need to revive growth, particularly in manufacturing and infrastructure to raise adequate resources for our developmental needs.”
The Finance Minister said that the sluggish mining sector will be given the required push and that the Government is keen on resolving the “current impasse” in it by encouraging investments and bridging the supply-demand gap.
Though India has emerged as the largest PPP market in the world with over 900 projects in various stages of development various sectors like airports, ports and highways, at the same time, Jaitley observed during the course of his budget speech that the model has seen some weaknesses too.
“We have also seen the weaknesses of PPP framework, the rigidities in contractual arrangements, the need to develop more nuanced and sophisticated models of contracting and develop quick dispute redressal mechanism,” he said.
He said in the wake of the fact that 110 central infrastructure projects are delayed due to regulatory hurdle issues and this has resulted in over `1.57 lakh crore cost overruns.
The Finance Minister said that his Government was committed to improving infrastructure in all sectors including roads, port, airports, railways, urban, rural and industrial infrastructure besides ensuring adequate flow of funds and financing of projects.
“As an innovation, a modified Real Estate Investment Trusts type structure for infrastructure projects is also being announced as Infrastructure Investment Trusts (InvITs), which would have a similar tax efficient pass through status, for PPP and other infrastructure projects,” he said.
Paying heed to requests of the states, he also proposed to revise royalty rates on minerals (which are supposed to be revised once in three years but since 2009 there has been no revision) that will help swell their coffers.
“It is my Government’s intention to encourage investment in mining sector and promote sustainable mining practices to adequately meet requirements of industry without sacrificing environmental concerns,” he said.
He also said that changes, if necessary, in the MMDR Act, 1957 would be introduced to facilitate the objective. India’s mining sector, particular mining of steel-making raw material, iron ore, was affected after the Supreme Court imposed ban in Karnataka and Goa on allegations of illegal mining. The Supreme Court had banned iron ore mining in Karnataka in July-August, 2011, and in Goa in October, 2012. This had led to a major fall in production and export of iron ore.
In the coal sector, he said that adequate dry fuel will be provided to power plants as extensive measures to augment domestic output and a strict mechanism to control the fuel quality are being put in place to fast track the sector.
Power plants across the country are facing fuel shortages and state-owned Coal India ltd, which accounts for over 80 per cent of domestic coal production, and NTPC have locked horns over fuel quality issue.
“Comprehensive measures for enhancing domestic coal production are being put in place along with stringent mechanism for quality control and environmental protection, which includes supply of crushed coal and setting up of washeries,” Jaitley said.