Govt appeals to private sector to invest in infrastructure
Updated: Jan 10, 2014 05:27:54pm
New Delhi, Jan 10 (KNN) The government is tweaking institutional mechanisms, resolving financial sector issues to nudge the private sector to invest more in infrastructure, said the Secretary of Urban Development.
Delivering a special address at a session on ‘Urban Infrastructure’ at the first edition of ‘Global Indian Business Conference (GIBC)’ organized by FICCI in partnership with Invest India and knowledge partner India Empire Group here today, Secretary, Ministry of Urban Development, Government of India, Sudhir Krishna said, new financial instruments are being devised to finance investment in the urban infrastructure space.
Further, serious efforts need to be made for unlocking land values to finance urban infrastructure as is being done by many countries abroad, he said.
Krishna went on to say that as long as the spatial distribution of project benefits can be internalized within a well-defined ‘benefit zone’, it is economically efficient to finance infrastructure projects by tapping the increments in land values resulting from them.
“Land based financing is not a practical or a desirable way to pay for the entire budget. However, as part of the mix of capital financing, it has significant advantages. Public-Private collaboration lies at the heart of land based infrastructure finance,” he said.
On the need for private sector investment, the investment for urban infrastructure, such as water supply, solid waste management, sewerage, urban transport, etc over a 20 year period 2012-13 (12th to 15th Five Year Plan), he said, is estimated at Rs. 39.2 lakh crore at 2009-10 prices as per the High Powered Committee Report. This obviously cannot be met by the public sector alone.
He informed that the Ministry of Urban Development has moved beyond the mere provision of infrastructure to meeting the Service Level Benchmarks (SLBs). SLBs have been set for the water supply, sewerage, sanitation and urban transport sector. It indicates a change in the mind set from mere provision of infrastructure to the higher realm of meeting service delivery benchmarks. The investment requirements have been worked out for the urban sector after incorporating SLBs.
Jawaharlal Nehru National Urban Renewal Mission – I (JNNURM-I) has been extended up to March 2014 from March 2012 to complete its already sanctioned projects. Moreover, fresh projects can now be sanctioned till March 2014 under the transition phase of JNNURM, Krishna added.
A panel discussion on ‘Investment opportunities in India’s urban development and infrastructure space’ was also held during the session.
Offering his comments, CEO and MD, DMICDC, Amitabh Kant, said that de-risked well-structured infrastructure projects are needed for sustainable growth of urbanization. The government can create the backbone for the infrastructure development but it is the private sector which must come forward and invest in these projects.
Kant said that cities are the key drivers of growth and the need is to know how to use technology to leap frog the development of smart cities. Innovation and sustainable growth strategies are required besides a sustainable public transport system. Also, urbanization must create jobs and with the Delhi Mumbai Industrial Corridor the process of cluster development should begin.
The government will play the role of a facilitator in developing urban infrastructure, said Group Executive Director, DLF Ltd, Rajeev Talwar. He added that there is a huge opportunity for the industry and large scale participation by the private sector is needed for sustainable development.
Integrated public transportation, processing and recycling of water and waste, use of renewable energy are needed to develop smart cities catering to the needs of the population, he added.
Meanwhile, Chairman and Managing Director, Raheja Developers Ltd, Navin M Raheja emphasized that besides developing urban infrastructure, it is necessary to develop regional infrastructure as well for inclusive and sustainable growth.
He said that the youth today is looking for gainful employment. Though migration from rural areas to urban land has been unprecedented and will raise in the years to come, still it is essential to focus on regional infrastructure as urbanization alone cannot fulfill the increasing demands of employment and facilitates required by the burgeoning population.
Partner-IIC, Ernst and Young LLP, Gaurav Karnik moderated the session. (KNN/ES)
Delivering a special address at a session on ‘Urban Infrastructure’ at the first edition of ‘Global Indian Business Conference (GIBC)’ organized by FICCI in partnership with Invest India and knowledge partner India Empire Group here today, Secretary, Ministry of Urban Development, Government of India, Sudhir Krishna said, new financial instruments are being devised to finance investment in the urban infrastructure space.
Further, serious efforts need to be made for unlocking land values to finance urban infrastructure as is being done by many countries abroad, he said.
Krishna went on to say that as long as the spatial distribution of project benefits can be internalized within a well-defined ‘benefit zone’, it is economically efficient to finance infrastructure projects by tapping the increments in land values resulting from them.
“Land based financing is not a practical or a desirable way to pay for the entire budget. However, as part of the mix of capital financing, it has significant advantages. Public-Private collaboration lies at the heart of land based infrastructure finance,” he said.
On the need for private sector investment, the investment for urban infrastructure, such as water supply, solid waste management, sewerage, urban transport, etc over a 20 year period 2012-13 (12th to 15th Five Year Plan), he said, is estimated at Rs. 39.2 lakh crore at 2009-10 prices as per the High Powered Committee Report. This obviously cannot be met by the public sector alone.
He informed that the Ministry of Urban Development has moved beyond the mere provision of infrastructure to meeting the Service Level Benchmarks (SLBs). SLBs have been set for the water supply, sewerage, sanitation and urban transport sector. It indicates a change in the mind set from mere provision of infrastructure to the higher realm of meeting service delivery benchmarks. The investment requirements have been worked out for the urban sector after incorporating SLBs.
Jawaharlal Nehru National Urban Renewal Mission – I (JNNURM-I) has been extended up to March 2014 from March 2012 to complete its already sanctioned projects. Moreover, fresh projects can now be sanctioned till March 2014 under the transition phase of JNNURM, Krishna added.
A panel discussion on ‘Investment opportunities in India’s urban development and infrastructure space’ was also held during the session.
Offering his comments, CEO and MD, DMICDC, Amitabh Kant, said that de-risked well-structured infrastructure projects are needed for sustainable growth of urbanization. The government can create the backbone for the infrastructure development but it is the private sector which must come forward and invest in these projects.
Kant said that cities are the key drivers of growth and the need is to know how to use technology to leap frog the development of smart cities. Innovation and sustainable growth strategies are required besides a sustainable public transport system. Also, urbanization must create jobs and with the Delhi Mumbai Industrial Corridor the process of cluster development should begin.
The government will play the role of a facilitator in developing urban infrastructure, said Group Executive Director, DLF Ltd, Rajeev Talwar. He added that there is a huge opportunity for the industry and large scale participation by the private sector is needed for sustainable development.
Integrated public transportation, processing and recycling of water and waste, use of renewable energy are needed to develop smart cities catering to the needs of the population, he added.
Meanwhile, Chairman and Managing Director, Raheja Developers Ltd, Navin M Raheja emphasized that besides developing urban infrastructure, it is necessary to develop regional infrastructure as well for inclusive and sustainable growth.
He said that the youth today is looking for gainful employment. Though migration from rural areas to urban land has been unprecedented and will raise in the years to come, still it is essential to focus on regional infrastructure as urbanization alone cannot fulfill the increasing demands of employment and facilitates required by the burgeoning population.
Partner-IIC, Ernst and Young LLP, Gaurav Karnik moderated the session. (KNN/ES)
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