Time-bound targets for major infra projects
National capital goods policy on anvil
To boost connectivity and lower congestion on key routes, the Railways plans to double or quadruple nearly 11,000 km of the total track length of 64,000 km by 2019-20.
The target was discussed at a recent meeting chaired by the prime minister, to review infrastructure projects. The Railways, it has been decided, should focus more on doubling and quadrupling of existing lines over the next four to five years, rather than new projects, except those in the Northeast and Jammu and Kashmir. The aim is to ensure existing tracks are decongested, rather than laying new projects.
Railways Minister Suresh Prabhu, in a recent interview with Business Standard, had acknowledged that with an investment plan of Rs 8.5 lakh crore over the next five years, they were focusing more on decongesting the network and improving the earning capacity.
For roads, officials said, a target of awarding around 10,000 km of new projects had been fixed for 2015-16. Under the Pradhan Mantri Gram Sadak Yojana, the ministry plans to construct around 26,000 km of rural roads in 2015-16. In ports, officials said, the meeting felt the existing target of 2,400 million tonnes of capacity by 2019-20 was good enough to handle the projected traffic of 1,600 mt. The current capacity in ports is 1,700-1,800 mt, which handles a traffic of 1,200-1,300 mt. For irrigation projects, the government is looking at bringing an additional 600,000 hectares under irrigation potential in 2015-16. Another 300,000-400,000 hectares will be created under command area development and 3.7 mn hectares brought under micro irrigation.
Vishwas Udgirkar, senior director of infrastructure at Deloitte, said: "I feel, for infrastructure projects, factors like land, detailed project reports, technical consultants, etc, are of much more importance than funding… meeting even 70-80 per cent of these targets will be a big challenge."
According to official data, 46 per cent of India's net sown area of 140.8 million hectares was under irrigation till 2011-12. In 2000-01, around 40.5 per cent of net sown area was under irrigation, a rise of 5.8 percentage points in a decade.
Finance Minister expects RBI rate cut
The department of heavy industry has constituted a joint task force with the Confederation of Indian Industry (CII) for a comprehensive national capital goods policy to realise the potential of this sector under the Prime Minister's Make in India project.
The task force will take up issues faced by the industry with to evolve a roadmap for the sector, comprising textile machinery, machine tools, electrical and power equipment, plastic machinery, construction equipment, process plant equipment and dies, moulds and press tools.
The initial framework for the policy, to be formulated by the next few months, has been articulated in a paper published by the ministry.
The paper outlines key strategic pillars for the Indian capital goods sector. The areas of focus include creation of an enabling system, expansion of market, promotion of exports, development of human resources, enhancement of technology and intellectual property rights, standards, focus on small and medium enterprises, and building necessary support services.
Sub-sector specific strategies have also been formulated for giving special direction and focus.
These strategies include elements such as access to capital, trade remedial measures, taxation, customs duties, preferential trading arrangements, World Trade Organization issues, attracting foreign direct investment, technological upgradation, safety and environmental awareness.
With a market size of $92 billion and production valued at $32 billion, the sector currently contributes to 12 per cent of India's manufacturing output. The vision of the proposed policy is to increase the share of capital goods contribution from the present level to 20 per cent by 2022 and establish India amongst the major capital goods producing nations in the world.
Ahead of the Reserve Bank of India (RBI)'s second bi-monthly monetary policy review, Finance Minister Arun Jaitley on Sunday said his “expectation” from Governor Raghuram Rajan was the same as general expectation on an interest rate cut.
“My expectation is the same as your expectation,” he said when asked about what he expected the RBI to do in the June 2 policy review.
“I expect what you expect,” when he was told during an interview with PTI that the expectation was of a rate cut by the RBI. The RBI has lowered its policy rate twice so far in 2015, but maintained a status quo in its first bi-monthly monetary policy released on April 7 on fears of unseasonal rains impacting food prices.
The repo rate, at which the RBI lends to the banking system, currently stands at 7.5 per cent and the cash reserve ratio, which is the amount of deposits parked with the central bank, is 4 per cent.
According to analysts, the mix of slowing inflation and weaker-than-expected growth are indicating that a policy rate cut is on the anvil. While a rate cut on or before June 2 is most likely, beyond that, room for additional rate cuts depend on structural reforms that the government undertakes.