India Sets Up Infrastructure Panel to Speed Up Project Approvals
India’s Prime Minister Manmohan Singh will head a panel aimed at speeding up approvals of infrastructure projects as he seeks to ease bottlenecks that impede growth and spur inflation, a government minister said.
The Cabinet Committee on Investment has been set up to fast-track projects, Environment Minister Jayanthi Natarajan told reporters in New Delhi yesterday. She didn’t give details.
Singh is seeking $1 trillion of investments in highways, harbors and power plants from 2012 to 2017 to spur development in India, where the World Bank says more than two-thirds of people live on less than $2 a day. He ended two years of inaction in mid-September by curbing fuel subsidies and allowing foreign investment in retail and aviation, amid political opposition, as part of a plan to boost investor sentiment.
“Execution is critical,” said Upasna Bhardwaj, an economist at ING Vysya Bank Ltd. (VYSB) in Mumbai. The investment panel “needs to function in the way it was originally envisaged or it will be just like any other committee.”
There are as much as $18 billion of stalled investments in India, two government officials with knowledge of the figures told Bloomberg News last month.
The cabinet committee also approved a land acquisition bill and allowed a 30 percent reduction in the sale of airwaves. The government approved a urea investment policy. More information about the changes in the policies wasn’t immediately available.
Singh is trying to reinvigorate the economy as the faltering global recovery threatens the outlook for Asia-Pacific nations even with signs of a pickup in China. The economy expanded 5.3 percent in the three months ended Sept. 30 from a year earlier, slowing to match a three-year low as growth in domestic spending and exports moderated.
Reserve Bank of India Governor Duvvuri Subbarao on Oct. 30 resisted Finance Minister Palaniappan Chidambaram’s calls for lower borrowing costs to spur investment, leaving the repurchase rate at 8 percent while cutting banks’ reserve requirements to aid lending. The central bank signaled it may reduce rates next quarter if inflation eases.
The government last week won parliamentary endorsement for its September decision to allow foreign direct investment in supermarkets, a move it says can help lower food prices should retailers like Wal-Mart Stores Inc. and Carrefour SA (CA) build warehouses and cold storage facilities to improve the supply chain.
While benchmark wholesale prices gained at the slowest pace in eight months in October, the easing may have be short-lived as the effects of a diesel-price increase spread through Asia’s third-largest economy. The wholesale price index probably rose 7.6 percent in November from a year earlier, after climbing 7.45 percent in October, according to the median estimate in a Bloomberg News survey before the figures are released today.
India’s inflation rate remains the fastest in the BRIC group that also includes Brazil, Russia and China.
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