New Delhi February 18, 2014:- Finance minister P Chidambaram has reiterated in his interim budget the major role played by the infrastructure and manufacturing sectors in boosting India’s potential growth. Chidambaram also laid a road map for the next government in a 10-point vision statement that formed part of his speech.
He said that for infrastructure, it was imperative that every proven model is adopted and the tested PPP model is more widely used. He also suggested that the new financing model should be worked for long-term funds and pooling of investments in the sector.
For manufacturing, Chidambaram’s vision statement talked of export-related growth. He proposed that all taxes — central and state (that go into an exported product) — should be waived off or rebated. He also proposed the minimum tariff protection in the domestic market to incentivise domestic manufacturing.
While the finance minister did not get into more finer aspects given that this was an interim Budget, he stated the achievements of capacity addition in infrastructure. He recalled that in 2012-13 and in the nine months of the current financial year, the government was successful in adding 29,350 MW of power capacity, 3,928 kms of national highways, 39,144 kms of rural roads, 3,343 kms of new railway track, and 217.5 million tonne of capacity per annum at ports.
“Besides, 19 oil and gas blocks were given for exploration and 7 new airports are under construction. We have also facilitated infrastructure debt funds to provide take out finance for infrastructure projects and ease pressure on the banking system,” he said.
“…there seemed to be a sense of déjà vu in the key tasks stated by him. Moreover, there did not appear to be too much progress on key aspects stated in earlier years such as Infrastructure Debt Funds, regulatory authority for the road sector, etc. While leveraging the PPP model is essential for infrastructure development, it is hoped that the new government also gives due emphasis on learning from the past experiences so that the issues faced in the last few years can be avoided,” said Vishwas Udgirkar, senior director, Deloitte India.
However, said that the government’s continued thrust on development of infrastructure and manufacturing will help industrial growth in the long term.
“The finance minister’s repeated references to the manufacturing sector’s weakness and the need for renewed thrust, along with infrastructure, are positive pointers towards improving the economy’s competitiveness. Much has to be seen, however, in what happens when the full Budget is unveiled after the election,” said Harsh Pati Singhania, director, JK Organisation and managing director, and vice-chairman, JK Paper.
He re-iterated how important it was to increase the share of manufacturing to 25% of GDP and to create 100 million jobs over the next one decade. He recalled the government’s efforts towards setting up of National Investment and Manufacturing Zones (NIMZs) and industrial corridors connecting all the major manufacturing centres of the country. -Business Standard