CM

YK
ND-ND
NATIONAL 12 THE HINDU THURSDAY, JULY 10, 2014
NOIDA/DELHI
NEW DELHI: The Economic Sur-
vey has called for maintaining
consistency in the govern-
ments infrastructure policies
to support economic growth.
The other pre-requisites to
drag the infrastructure out of
the cycle of delays and slow
growth are stepping up in-
vestment, improving govern-
ance and removing
procedural bottlenecks.
While consistency in poli-
cies is the main normative vi-
sion, the Survey has taken a
hard look at one of the key
factors for expanding the in-
frastructure sector long-
termnancing.
Bank nancing
The Survey has sought to
address the issue against the
backdrop of reluctance by
banks to nance many such
projects. At the same time, it
cannot be denied that banks
are the main source of fund-
ing but are unable to provide
long-termcredit due to asset-
liability mismatch.
Any move to introduce
oating rates to address the
mismatch leads to higher pro-
ject cost due to rate uctu-
ations. Banks have the
additional burdenof having to
make up for the absence of a
corporate bond market and
the absence of products for
hedging foreign exchange
risks. To correct this situa-
tion, the Survey has called for
a transparent trading process,
uniform stamp duty, credit
enhancement mechanism
and an integrated trading and
settlement mechanism.
The Survey has also agged
an upcoming international
situation that could impact
Indias quest for overseas
funds. Withdrawal of the
stimulus package by the econ-
omies in the developed world,
especially the U.S., will lead to
tight monetary and nancial
conditions. For this, India will
have to take the lead in ap-
proaching multilateral devel-
opment banks and
multilateral nancial institu-
tions for meeting the funding
requirements of the infras-
tructure sector in these tough
conditions. The objective
should be to devise mecha-
nisms that can ensure ow of
funds, especially if invest-
ments from conventional
sources are inadequate for
meeting the requirements of
the infrastructure sector.
Roads
The ills of the road sector
were laid out in great detail by
the Ministry of Highways and
Surface Transport through a
White Paper released a few
days before the Survey was ta-
bled in Parliament. The Sur-
vey has largely endorsed the
White Paper and suggested
easing of exit conditions to
enable promoters sell equity
positions after construction
as also pass on all the benets
and responsibilities to the
new owner. Promoters can
then use the equity for fresh
projects. The challenges fac-
ing lending institutions
should also be kept in view,
especially while designing
new nancing products to
avoid undue burden on the
developer.
The Survey has taken a look
at international practices and
suggested that the govern-
ment examine concepts such
as traffic trigger and re-
equilibrium discount. Under
traffic trigger, after a certain
volume has been raised, the
concessionaire must increase
capacity toensure a minimum
level of service to road-users.
Under re-equilibrium, users
get discounts if performance
parameters are breached.
Telecom
The Survey has concentrat-
ed on trading and sharing of
spectrum in order to reduce
the cost of radio-waves. The
government has already ap-
proved spectrum trading and
sharing but the Department
of Telecomis yet to announce
the guidelines.
The Survey felt better spec-
trum management could lead
to a liberal merger and acqui-
sition policy as also examine
separation of telecom net-
working from services. The
existing guidelines for merg-
ers and acquisitions have led
to just one deal Airtel and
Loop Mobile. It has also
sought assistance for develop-
ing local manufacturing, re-
search and entrepreneurship.
The Survey had a word of
praise for the sector since it
attracted $1.3 billion in in-
vestments during the previ-
ous scal. The comparable
gure was just $304 millionin
the previous scal. A series of
reform measures by the gov-
ernment, innovations inwire-
less technology and active
participation by the private
sector played an important
role in the growth of the tele-
com sector in the country, it
said.
Coal
The Survey has called for
allowing private sector into
coal mining and restructuring
of Coal India Limited to elim-
inate imports which cost
nearly Rs.1,00,000 crore last
scal. Imports are likely to in-
crease because the gap be-
tween demand and supply has
been increasing consistently.
The Survey also made a strong
case for removing pricing dis-
tortions due to administered
pricing. These xed prices
are dulling the market re-
sponse and reducing the ex-
ibility of the market
economy, it noted.
It has suggested accelerat-
ing coal production in the
short-term by building criti-
cal feeder route for coal, clear-
ing pending environment and
forest clearances, permitting
commercial coal mining by
the private sector and res-
tructuring state-owned Coal
India. It also mentioned the
need to expedite the passage
of a Bill to amend the Coal
Mines (Nationalisation) Act
that has been pending in the
Rajya Sabha for over a decade.
Energy
The Survey has suggested
market-linked pricing to
boost domestic oil and gas ex-
ploration, and production. In
the eld of natural resources
where there is global trading,
appropriate incentives for ex-
ploration and extraction in
India are obtained whenthere
is pricing parity with the
world price excluding trans-
port costs or taxes, it said.
If rms obtain a lower rev-
enue per unit of mineral ex-
tracted in India, there will be
under-investment in explora-
tion and extraction, it said. It
may be recalled that the Cabi-
net Committee on Economic
Affairs had last month de-
ferred a decision on imple-
menting the Rangarajan
formula for pricing of all do-
mestic natural gas that was
approved and notied by the
previous UPA regime.
Civil aviation
The Survey detected signs
of revival ingrowthinthe civil
aviationsector with the possi-
bility of entry of new players
such as AirAsia and Tata-SIA
Airline. The recovery is nas-
cent because domestic pas-
senger traffic at Indian
airports has grown only by 5.2
per cent in the last scal.
Consistency in policies can ensure growth
Long-term nancing is one of the key factors for expanding infrastructure sector
Sandeep Dikshit NEW DELHI: Global warming is
expected to impact the avail-
ability of basic necessities like
freshwater, food and energy.
According to the Economic
Survey, India, like many de-
veloping countries, has not
even utilised its fair share of
the earths carbon space, nor
has it achieved basic mini-
mum standards of living for
its entire population. Per cap-
ita energy use in developing
countries is only about 25 per
cent of that in developed
countries on average, the Sur-
vey says, adding that 400 mil-
lion Indians still do not have
electricity in their homes and
about 800 million use some
form of biomass as their pri-
mary or only energy source
for cooking which is
worrisome.
The issue of funding and
the role of the global commu-
nity have been stressed as
paramount for sustainable
development and the Survey
warns that while in India, cli-
mate change and sustainabil-
ity are being mainstreamed in
the development process,
global cooperation and sub-
stantial additional funding
are required. If resources of
this magnitude are not made
available, outcomes in terms
of growth, sustainability and
inclusive development are
likely to be sub-optimal.
The challenge before this
government is outlined as
The essence of sustainable
development is meeting the
needs of the present without
jeopardising the ability of fu-
ture generations to meet their
needs. The key question, the
Survey says, therefore is,
whether countries like India
are prepared to accommodate
global targets, given their do-
mestic obligations of basic de-
velopment, including
minimum necessary needs of
the poor. The bottom half of
the world can do its bit but it
cannot be expected to shoul-
der the bulk of the worlds
development, sustainability
and climate crisis burden.
The Survey says it would be
constructive to look at sus-
tainable development in the
context of historical, spatial
and other dimensions.
In terms of achieving the
Millennium Development
Goals, India has a mixed bag.
While it has achieved the tar-
get of halving the percentage
of population below the pov-
erty line and is on track to
achieve universal primary
education, India is unlikely to
reach the target of maternal
mortality rate of 109 per 1000
live births by 2015.
The other areas of concern
relate to the share of women
in wage employment in the
non-agricultural sector, pro-
portion of births attended by
skilled personnel and propor-
tion of population with access
to improved sanitation,
where India is lagging by a
huge margin.
India has also voluntarily
committed to an endeavour
to reduce the emissions in-
tensity of its GDP by 20-25
per cent by 2020. An expert
group was set up by the Plan-
ning Commission for evolving
Low Carbon Strategies for In-
clusive Growth and it has re-
cently submitted is nal
report.
Projections in this report
say that low carbon strategies
will bring down the average
GDP by 0.15 per cent point,
while per capita CO2 emis-
sions in 2030 will fall from3.6
tonnes per person in the BIG
(baseline inclusive growth)
scenario to 2.6 tonnes per
person in the LCIG (Low car-
bon inclusive growth)
scenario.
Resources, global cooperation
key to sustainable development
Meena Menon
India, like many developing countries, has not even
utilised its fair share of the earths carbon space,
nor has it achieved basic minimum standards of
living for its entire population.
PHOTO: ARUNANGSU ROY CHOWDHURY