Ahluwali calls for upgrading Mumbai's infrastructure

Mumbai, Mar 19: Echoing Prime Minister Manmohan Singh's views that urban infrastructure in general and Mumbai's in particular needed tremendous improvement, Planning Commission Deputy Chairman Montek Singh Ahluwalia today said that if Mumbai has to be developed as a regional financial hub, then its infrastructure needs to be substantially upgraded.

''The Centre is ready to give money to the Maharashtra for this purpose, provided the State government agrees to the reforms process as laid down under the Jawaharlal Nehru Urban Renewal Mission,'' Mr Ahluwalia said, while interacting with journalists on the sidelines of the Asia Society's 16th Asian Corporate Conference, 'Driving Global Business: India's New Priorities, Asia's New Realities', here today.

Mr Ahluwalia pointed out that amongst all the metros in the country, Mumbai had the best potential to emerge as a regional and international financial centre but for this, however, the city's infrastructure needs tremendous upgrading.

The Planning Commission has interacted with Chief Minister Vilasrao Deshmukh on the matter of the State's compliance with the requirements of eligibility for availing grants from the urban renewal mission and the latter has responded positively, he revealed.

He further said that the central government was mulling measures to further liberalise capital account convertibility in order to make the investment climate in the country more investor-friendly, adding that ''a roadmap in this direction will be finalised soon in consultation with the Union finance ministry and Reserve Bank of India.''

Pointing out that infrastructure development has picked up in recent months, Mr Ahluwalia said that airports modernisation, roads and ports modernisation as well as opening up of the railways's container traffic movement to private players are all indicators of this phenomenon.

He, however, admitted that the pace of progress on the power front was slow in comparison to the other segments and said that ''the problem lies in transmission and distribution rather than in power generation.'' Highlighting the fact that nearly 36 per cent of power generated does not fetch returns as it is lost during transmission, he said that unless players are guaranteed returns on their investment, they will not invest in the power sector, adding that ''though we have unbundled the state electricity boards (SEBs), their total loss still amounts to a staggering Rs. 24,000-crore.'' The Planning Commission was seized of this matter and was accordingly giving the highest priority to power sector reforms, he said, adding that opening up of the coal sector to private players was being given serious consideration.

Earlier, in his keynote address at the conference, the Deputy Chairman of the Planning Commission said that there now exists a political consensus that India has gained a lot from globalisation and that Indian business has shed its protectionist mindset of the 1990s.

''The country's economic growth is presently at eight per cent and this is likely to be maintained if not upped in the next three-year period,'' he averred, adding that ''a nine per cent growth over the medium-term is very feasible.'' The government of India will extend every support to Indian industry to attract foreign investments besides enabling it to become more competitive, he said. ''Foreign investors are now evincing tremendous interest in India and we expect FDI inflow to increase in coming times,'' he said.

On infrastructure, Mr Ahluwalia admitted to the vast gap that existed in standards between China, countries in south-east Asia and India and said that both the public and private sector had a role to play in accelerating growth in this sector. ''We are looking at policies that will encourage greater private investment in the power sector,'' he said.

Enumerating an area of concern, Mr Ahluwalia said that India's agricultural sector was still lagging behind and ''unless accelerated growth is witnessed in this sector, India will find it difficult to achieve the 8-to-9 per cent growth that we are presently targeting.'' It is essential that Indian agriculture should move away from just producing foodgrains to diversified agriculture such as horticulture, agro and food processing, he said, emphasising the critical role that private investment can essay in this sphere.

Echoing the Prime Minister's oft-repeated theme of inclusiveness, Mr Ahluwalia said that there was tremendous potential for private sector investment in marketing, post-harvest technologies and export linkages in agriculture. Investments in the chain from the farmer to the market in providing facilities such as cold storage facilities, can be done only by the private sector, he said, adding that ''the next green revolution lies in diversified agriculture.'' On existing regulations that limit foreign investors from exiting their present joint ventures and starting new ones on their own, Mr Aluwalia said that already some relaxations have been introduced and the government will review this aspect.

He said that this was an issue to investors before but that it would not affect investments in the future because terms of business can be agreed upon contracturally. ''This is a legacy problem and we are aware of this and are already contemplating, how best to address this problem of foreign investors,''he declared, adding that India possesses the capacity to absorb three times more FDI than it does presently.

UNI