Infrastructure

Infrastructure
24. The acuteness of our infrastructure problems is equalled only by our resolve to tackle them. One of the major planks of this budget is to provide strong stimulus to the infrastructure sector through larger public and private in these sectors. This will also help to boost industrial growth and overall economic activity.

25. The plan outlay for the key infrastructure sectors of Energy, Transport and Communications in the revised estimates for 1997-98 was Rs.45,252 crore. I am happy to announce that the outlay for these sectors for the current year will be Rs.61,146 crore. This is an increase of 35 per cent. I am hopeful that this steep increase in investments will trigger industrial activity and revive rapid economic growth.

26. Within a few weeks of taking office, the government passed an important ordinance for establishing Central and State Electricity Regulatory Commissions with the primary objective of rationalising electricity tariffs. This will go a long way towards enhancing investor confidence in the power sector and facilitate raising resources for higher public and private investment. We have also simplified the procedures for extending sovereign counter guarantees for a few "Fast Track" power projects which were held up for long. We now expect early financial closure of these projects. The total plan outlay for Ministry of Power is being increased to Rs.9,500 crore as against Rs.6,738 crore in RE 1997-98.

27. The outstanding dues from State Electricity Boards to major public sector undertakings such as NTPC and Coal India amount to about Rs.10,000 crore. These large outstanding dues are serious impediments to investment by these public sector undertakings. The government will evolve a guarantee scheme to cover such dues. On the strength of such guarantees, the PSUs concerned will be able to raise resources either by securitising these debts or directly entering the market for tapping resources. This would help these enterprises to raise resources to fund large projects in the power and coal sectors. The resulting investment will also boost industrial growth and investment through linkage effects.

28. We must build more roads and the quality of our roads must also improve. Our National Highways must be brought up to international standards. I am providing Rs.500 crore for the National Highways Authority of India to catalyse new road projects including four-laning of existing National Highways. I shall announce some more measures for this sector in Part B of my speech.

29. To enhance long-term finance for infrastructure investment in the private sector, the Infrastructure Development Finance Company Limited (IDFC) was incorporated as a non-government company in 1997. I am happy to inform the House that the IDFC has tied up its paid up equity capital of Rs.1,000 crore, including equity participation of Rs.400 crore by nine foreign investors and has now commenced operation. In order to put IDFC on par with other all India public Financial Institutions in the matter of fiscal incentives and fund raising benefits extended to these institutions, it is proposed to make necessary amendments to the Companies Act.

30. Provident funds are a potentially important source of funding for private sector infrastructure projects. The present pattern of investment prescribed for provident funds does not permit any investment in securities of private sector infrastructure projects. I propose to provide some flexibility in this regard by allowing upto 10% of the new accretion to provident funds to be invested in private sector securities which have an investment grade rating from at least two credit rating agencies. This is an enabling provision which will allow the Board of Trustees managing these funds to invest in these securities subject to their assessment of the risk-return prospects of each security.