'States to prepare shelf of infrastructure projects'

New Delhi, July 21: Assuring that funding was not a problem, Finance Minister P Chidambaram today asked State governments to prepare adequate shelf of world class infrastructure projects under Public- Private Partnership(PPP) mode.

"Funds from a large number of sources are available today. Some State governments have been able to attract a good response of projects under the PPP mode, while others have not. The need is to have a large shelf of infrastructure investments," Mr Chidambaram said inaugurating a Conference of Chief Secretaries on Public- Private Partnerships.

Mr Chidambaram said the progress in promoting PPP projects has been limited to a few sectors. Investments through the PPP mode need to increase substantially in the States and across States, he said.

The Finance Minister said the provision of quality infrastructure was a pre-requisite for the economy to achieve a higher growth trajectory on a sustained basis. For a trillion dollar plus economy, the total investment in infrastructure has to increase from 4.5 per cent to 7.5 per cent of GDP in the Eleventh Five Year Plan.

During the Eleventh Five Year Plan (2007-11) projected investments of more than 320 billion dollars at 2005-06 prices are envisaged in the infrastructure sector, which is equivalent to 475 billion dollars at current prices.

Mr Chidambaram said the investment requirements were enormous and were not likely to be met from the public sector alone. Attracting private capital in this sector was a key strategy to meet the resource deficit. Consequenetly, Public- Private Partnerships are being encouraged as the preferred mode for execution and operation of infrastructure projects.

The Finance Minister said an year's investment rerquirement for the development of infrastructure works out to 90 billion dollars a year.

If the private sector investments for this purpose are about 20 per cent, then the quantum of resources from this source works out to 18 to 20 billion dollars a year.

Seated on the dais with Mr Chidambaram was Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Mr Chidambaram said there was a lack of shelf of credible, bankable infrastructure projects, which would be offered for financing to the private sector. Though initiatives have been taken, both by the Central and State governments to develop PPP projects these tend to be limited to a few sectors. He said to address the financing needs of these projects various steps have been taken by the government. These include setting up of India Infrastructure Finance Company, launching of a new scheme to meet Viability Gap Funding of PPP projects, setting up of infrastructure funds and easing of ECB norms.

Besides, the government has also set up an India Infrastructure Development Fund with an initial corpus of Rs 100 crore for supporting the development of PPP projects.

The Finance Minister traced the history of PPP projects and said the first initiative was taken during the first Five Year plan.

Mr Chidambaram said in principal approval has been given to 25 projects under the Viability Gap Funding mechanism during 2006-07, The States which have made use of this facility include Madhya Pradesh, Maharashtra, Gujarat, Andhra Pradesh, Rajasthan, Kerala, Karnataka, and West Bengal. "These States are noteworthy as also the States which do not fall in this category", he said.

The Finance Minister stressed the need for capacity building in diverse fields relating to infrastructure development. These include solid waste management, terminals in ports, building power generating plants and transmission centres.

UNI