NEW DELHI: Prime Minister Manmohan Singh on Wednesday sought to send a strong signal the government meant business by outlining an ambitious agenda to put infrastructure projects on the fast track.
At a high-level inter-ministerial meeting chaired by him, Singh said the initiatives were part of efforts to pull the economy out of “turbulent weather” and move towards nine per cent annual GDP growth.
While economists and analysts were happy with the overall move to go for infrastructure-led growth, the announcements, they said, fell short of expectations as some initiatives had no implementation timeline and might remain on paper.
On Wednesday’s meeting was held in the backdrop of economic growth falling to its lowest in nine years and a disappointing performance by the key infrastructure sector. The growth rate of core industries, which have a combined weight of 37.90 per cent in the Index of Industrial Production, had slumped to 2.2 per cent in April.
Shares of infrastructure companies had gone up sharply in positive anticipation ahead of the meeting. Among the biggest gainers were GMR Infra, which surged 11.08 per cent, and IVRCL Infra, which rose 7.31 per cent. Reliance Power led the energy space, with a rise of 6.5 per cent. Interestingly, aviation stocks also jumped, with Kingfisher Airlines being the biggest beneficiary. The stock rose 17.33 per cent. Nothing specific regarding aviation companies was discussed in the meeting.
A statement by the Prime Minister’s Office (PMO) said the government would award 9,500 km of road projects in the financial year, an increase of 18.7 per cent over last year. Another 4,360 km of roads will be awarded for maintenance under the OMT (Operate, Maintain, Transfer) system for the first time.
Other initiatives include two new major ports in Andhra Pradesh andWest Bengal, an addition of 18,000-Mw power capacity, three to four international airports, an airline hub policy, an elevated freight corridor in Mumbai and a bullet train from Mumbai to Ahmedabad.
The meeting was attended by ministers and secretaries of key infrastructure ministries: power, railways, roads, shipping, civil aviation and coal.
Planning Commission Deputy Chairman Montek Singh Ahluwalia made a presentation on the targets set after extensive consultations with the ministries concerned and the PMO.
At the meeting, Singh blamed the country’s economic woes mainly on the euro zone debt crisis and rising international petroleum and commodity prices. Pointing that the country would need an investment of $1 trillion over the next five years in infrastructure alone, he emphasised the need to involve the private sector through public-private partnerships.
“In these difficult times, we must do everything possible to revive business and investor sentiment. We must work to create an atmosphere conducive to investment and to removing any bottlenecks to growth,” he said.
Singh outlined that in that context, infrastructure investment would play a major role. “In the short term, it will boost investment rates across the economy. In the long run, it will remove the supply constraints that affect industry and trade,” he said, adding that achieving targets in key infrastructure sectors was key to success and would inspire confidence about overall economic growth.
In power, the capacity addition target for this year has been fixed at 18,000 Mw, including 2,000 Mw to be added by the Kudankulam Atomic Power Project. The power generation target is 930 billion units, an increase of 6.2 per cent.
For the ports sector, the target for FY12-13 consists of a total of 42 projects costing Rs 14,500 crore and a capacity of 244 MTPA — three times that achieved last year. Two port projects will be taken up during the year in Andhra Pradesh andWest Bengal. The total investment will be Rs 20,500 crore for a capacity of 116 MTPA.
In the civil aviation sector, work on the Itanagar airport costing Rs 2,100 crore would commence and three newgreenfieldprojects be awarded in 2013-14. These will be at Navi Mumbai,Goaand Kannur. According to the targets set today, new international airports will be set up inLucknow,Varanasi,Coimbatore, Trichy andGaya.
It has been decided an airline hub policy will be finalised. The hubs would be operationalised inDelhiand Chennai in FY13.
By the end of July this year, additional projects on public-private partnership basis would be finalised for 10-12 existing airports and 10-12greenfieldairports. These would be awarded during the year.