The needs of Infra

INDIA INC eagerly looks forward to Union Budget 
2012-13. In a scenario of high inflation, liquidity crunch, high interest rates and subdued business sentiment, the Budget is expected to provide policy directions that will shape the course of our economy. Infrastructure can be a game-stopper here, if capacity addition is not done proactively. A push in this sector is much needed. Companies and SEZ units in this sector need to be exempted from Minimum Alternate Tax (MAT). The $30 billion annual cap on External Commercial Borrowing (ECB) may be lifted temporarily so that India Inc raises more long-term resources from abroad for infrastructure.

Sectors that merit immediate attention are:

POWER: The benefit for this sector under Section 80IA will expire on March 31. However, given the huge demand-supply mismatch, it is imperative that the government extend it. The financial health of state electricity boards is a major area of worry, and can translate into a banking sector crisis if not addressed. The VK Shunglu Committee recommendation, that RBI should buy all bad SEB loans from banks, needs to be taken seriously. Around 55 per cent of our power production is coal-based, but despite abundant reserves, we import 140 million tonne annually. Of the 294 coal blocks here, 140 are in the no-go zone. These things must be rectified.

ROADS: Rural roads need our attention. Better transport network in the hinterlands will revitalise rural economy. Government should consider building concrete roads along select rural stretches. Although they costs six to seven times more than asphalt ones, they need minimum maintenance and last very long.

LAND ACQUISITION: This has emerged as a serious challenge both for infrastructure creation and industries. While the centre has a Land Acquisition Bill, each state is free to make its own. Centre should reach out to the states and work together to identify non-agricultural or fallow tracts, and create a national land map. Farmers willing to offer their land for industrialisation can approach state governments. Based on this ‘land bank’, industries can buy land from the state government and also directly negotiate with farmers. Government can play the facilitator. Connecting each zone to the nearest highway with a cement road and a rail link can facilitate attracting investment.