Infrastructure gets forex facelift

The good news is India’s infrastructure might finally see a facelift. In a move to speed up completion of a number of infrastructural p...

The good news is India’s infrastructure might finally see a facelift. In a move to speed up completion of a number of infrastructural projects, the FM has proposed Montek Singh Ahluwalia’s plan to use part of the forex kitty.

This fund will be used through a Special Purpose Vehicle (SPV) to complete specific projects in sectors like roads, ports, airports and tourism. To be appraised by an Inter-Institutional Group of banks and finacial institutions, it will allow borrowings for debt with long-term maturity from SPV. The borrowing limit for the first year is set at Rs 10,000 crore. An additional provision of Rs 1,500 crore has been set for ‘‘viability gap’’ fund which will work in conjunction with SPV.

The other prominent initiative is the increase in the outlay for National Highway Development Programme (NHDP) from Rs 6,514 crore in 2004-05 to Rs 9320 crore in 2005-06. The rural India who lies on the other end of these roads have also benefitted with the revival of a Rs 8000 crore Rural Infrastructure Development Fund. But this is where the party ends. The industry still wants to know what happened to the Inter Institutional Group of financial institutes which was supposed to pool in Rs 40,000 crore for infrastructure funds, according to last year’s budget announcement. Says Ashwini Kakkar, president, CEO & managing director, Thomas Cook, ‘‘Last year’s infrastructure allocation should be used as a learning model. The entire fund was underutilised and certainly was not a success.’’

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But Kakkar is hopeful that the National Urban Renewal Mission and the decision to make Mumbai a regional hub for finance, announced by the FM, should take off. Designed to cover seven mega cities, and cities with a population of over a million, the mission has a outlay of Rs 5,500 crore including a grant component of Rs 1,650 crore to be allocated for city infrastructure.

The FM has identified projects like the Mumbai Metro Rail Project, the Mumbai Trans Harbour Link, the Mumbai Western Expressway Sealink and the Bangalore Metro Rail Project as examples of projects which the mission could support.

Mastek’s chairman Ashank Desai though is not too happy with the fund allocations. ‘‘Considering that the IT industry depends on good infrastructure and we were looking for more infrastructural spending, I didn’t hear much in that direction.’’

Lalit Suri, CMD, Bharat Group of Hotels, feels that ‘‘With the opening up of the skies, new entrants in the aviation scene and resultant growth in tourist traffic, there was a need to provide infrastructure status to the hotel industry. It should have been more aggressive in nature.”

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An industrialist who did not want to be quoted had the last word: ‘It should not be a case of smoke without fire.’’ After all, it’s not really good news when the FM warns, ‘‘The most glaring deficit in India is infrastructure deficit.’’