Govt may set up $10 billion India infra debt fund
Inflation to taper by Dec, says Montek
The Planning Commission of India is exploring a $10 billion India Infrastructure Debt Fund in order to address financing problems of public-private-partnership infrastructure projects.
This was disclosed by the Planning Commission Deputy Chairman Montek Singh Ahluwalia here on Friday while addressing the Bangalore Chamber of Industry & Commerce (BCIC).
The report of committee headed by HDFC Chairman Deepak Parekh is currently with finance ministry and planning commission, which is examing it. The finance ministry and planning commission he said will go into whether suggestions on regulatory issues are practical and necessary and how to improve upon it, if needed. The idea of creation of such a fund was to help raise low-cost long-term resources for re-financing infrastructure projects that are past construction stage and associated risks.
The panel, he said, has mooted that money for the fund could be sourced from International Finance Corporation and the Asian Development Bank and other sovereign funds. He said while there has been a lot of infrastructure public-private-partnership projects in the pipeline, however, operational probelms have dogged several of them given regulatory issues involved in debt financing. “The panel has gone into this aspect and we are examing the same”, he added. On inflation, he averred that rate of inflation would come down to 6 per cent by end of December. Conceding that the situation was uncomfortable now, he said, progressively, it will become less uncomfortable soon. “We will not be stuck with double digit inflation,” he claimed. Last year, around this time (July) prices rose sharply, but after November prices climbed up gradually. “I am not saying that prices are going to crash, but they are going to drop. Inflation rate will come down to 6 per cent level by December,” he said, while cautioning that drastic monetary squeeze would also kill growth. “It’s not a very clever thing to do,” he said.
On mid-term review of 11th plan period, he said desired targets in terms of spending on infrastructure sector were not realised. “As against target of $500 billion investment in infrastructure sector, we can estimate to come close to the target by end of the period. On the whole, it is a good story. The private sector investment has gone up to 35 per cent as against the target of 30 per cent. We need to increase it to 50 per cent of $1 trillion during 12th plan period,” he noted, while stating public spending in infrastructure sector is crucial to achieve 9 per cent economic growth.
