State governments should adopt PPP model for infrastructure: FM

By Staff
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Google Oneindia News

New Delhi, Sept 6 (UNI) Finance Minister P Chidambaram today appealed to the State governments to take recourse to the Public Private Partnership (PPP) model for infrastructure development, taking advantage of the various schemes and initiatives of the government.

Addressing the Consultative Committee Meeting attached to his Ministry Mr Chidambaram said that many of the State Governments have not caught up with the PPP concept and most of the projects are confined to a few states, help can be taken from a panel of 11 expert Transaction Advisors.

He stated that the PPP issue has been discussed in detail at the two national and four regional level conferences organised by Ministry of Finance.

Mr Chidambaram said the country's economic performance in the past few years - particularly in the last three years - has been commendable on many counts. Economic growth has accelerated and averages an annual growth of more than eight per cent.

The Finance Minister said the country's infrastructure deficiencies have become more visible because of high growth. The most visible symbols of overstretched infrastructure are the congested highways, airports and ports.

Mr Chidambaram said traffic at ports has grown at 13 per cent in 2007-08 over 2006-07; air passenger movement (25 per cent) and air Cargo (10 per cent). Railways have clocked a growth of nine per cent in freight, eight per cent in passenger traffic over the last three years.

Mr Chidambaram said the gross capital formation in infrastructure, as a proportion of GDP, has remained at around four per cent, from 1997-98 to 2003-04.

To sustain nine per cent GDP growth, investment in infrastructure should be increased from 4.6 per cent to around eight per cent of GDP over the Eleventh Plan period.

He said that the Planning Commission has estimated that investment in infrastructure - defined broadly to include road, rail, air and water transport, electric power, telecommunications, water supply and irrigation - will need to be of the order of about Rs. 14,50,000 crore or 320 billion dollars during the Eleventh Plan period.

Breakup amongst various sectors is: Power (Rs 6,16,500 crore), Railways (Rs 300,000 crore), National Highways (Rs 220,000 crore), Civil Aviation (Rs 40,000 crore), Ports (Rs 50,000 crore) and Residual sectors (Rs 2,23,500 crore).

Mr Chidambaram said as the investment requirements were enormous and cannot be met from the public sector alone, it was imperative to explore avenues for increasing investment in infrastructure through a combination of public investment, public private partnerships and occasionally, exclusive private investments wherever feasible.

He opined that among the various options available, the Public Private Partnership (PPP) approach is best suited for the infrastructure sector. In addition to freeing government resources to expand investments in other sectors, PPPs bring in private sector expertise and efficiencies in operation and maintenance leading to increase in quality of public services delivered.

The meeting was attended by K C Baba, Mohammad Salim, M Ramadass, Narsingrao H Suryawanshi and Tarit Baran Topdar from Lok Sabha and Mr Bimal Jalan and Dr Mahendra Prasad from Rajya Sabha.

Ministers of State for Finance S S Palanimanickam and Mr Pawan Kumar Bansal, apart from senior officers of the Finance Ministry, also attended the meeting.

UNI

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