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Montek Singh rules out foreign investment in roads

Planning Commission member and former finance secretary Montek Singh Ahluwalia today called for major reforms in infrastructure sectors like power, roads, railways, ports, and telecommunication to revive the country's sagging economy.

Addressing members of the Confederation of Indian Industry, Southern Region, in Bangalore, he said the slowing down of economic activity had given the country breathing space for creating basic infrastructure.

Despite the recession in the industrial sector because of internal and external forces like the south-east Asian crisis, the performance of the agriculture sector will be good, with a bumper harvest this year, he said, keeping the GDP (gross domestic product) growth rate at 5.5 to 6 per cent.

Ahluwalia said the slowdown in economic activity is attributable to various factors. Externally, the whole of Asia, especially south-east Asia and Japan, are facing a recession. This has in turn affected the Indian economy as exports have fallen.

Further, the tight cash position with the withdrawal of about $1.5 billion from the stock market by international investors, the elections, and the unstable political situation have contributed to the slowdown, with the combined effect seen in the industrial sector.

Ahluwalia said the Centre has already set up a task force for infrastructure and suggested the creation of a corpus fund by levying 50 paise per litre of diesel to collect Rs 10,000 million for building roads, especially national highways, and developing road transport.

An investment of Rs 200,000 million is necessary in the sector, with the golden quadrangle -- the Delhi-Bombay-Calcutta-Madras corridor -- now on the agenda for four-lane development.

He ruled out the possibility of international investment in roads, except for construction of bypass roads, where there is the possibility of levying a toll. Otherwise, the government and related agencies have to take up the work, he said.

Another major area that needs development is power. The government has proposed the setting up of state electricity regulatory commissions to revive the state electricity boards and have proper tariffs for power. The total losses incurred by the various SEBs are in the region of Rs 100,000 million, he said.

With the setting up of the commissions, political interference in the subsidies and fixing of different rates for power supply will be overcome, he said. The SEBs have to become viable, distribution and transmission have to be streamlined, and theft of power has to be checked, he said.

He urged the CII to interact with the state governments and mobilise public opinion to arrive at a uniform tariff and reform the SEBs.

He said the World Bank favours giving aid to improve the power sector only where it is economically viable. He cited the examples of Andhra Pradesh and Haryana which have received $300 million and $600 million, respectively.

UNI

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