The government may dive into hard-earned retirement and insurance funds as it lines up Rs 102 crore of investment in the next five years to set right the country's creaking infrastructure sector and pump prime the economy to help achieve the goal of $5 trillion.
The task force set up under the chairmanship of Economic Affairs Secretary Atanu Chakraborty to suggest sources to finance such a large sum, has recommended wide-ranging reforms to attract long-term foreign and private capital into infrastructure, ramping up resources for which has been easy in the past.
It has even gone on suggesting monetisation of land and other by ministries, public sector enterprises and local bodies and has identified the first set of assets to be monetised by March next year on which work has been initiated by the ministries power, shipping, highways and railways.
Around 25% of Rs 102 crore will go into the country's rattled power sector, followed by road, rail, urban and rural infrastructure, digital India, education, health and water, Finance Minister Nirmala Sithataman said unveiling the plan.
The project identification came months after Prime Minister Narendra Modi announced Rs 100 lakh crore worth of investment on infrastructure sector in the Modi 2.0 government.
But the announcement made immediately before the end of market hour failed to perk up the market sentiment and the Benchmark Sensex shed 304 point at close. Banks, automobile and infrastructure stocks were among the major losers.
The minister said the investment would be channelled through a National Infrastructure Pipeline to which the Centre and states together will contribute 39% each and the rest 22% would come from the private sector.
She said she hoped to add Rs 3 lakh crore worth of additional projects to the pipeline soon.
The task force, which is mandated to tap resources and oversee the completion of projects, also suggested further reforms in FDI sector to tap foreign funds and recommended the government work with insurance and pension regulators – IRDA and PFRDA – for removal of regulatory hurdles for withdrawal from a “growing pool of pension and insurance assets”.
“As most of the infrastructure projects are rated below AA, it is critical to enhance their rating to augment the access of institutional investors to infrastructure sector through capital market instruments. It is also important that long-term resources from the pension and insurance sector are channelled into the infrastructure bond market,” it said.