Budget offers big push for rural infrastructure

Green transportation gets lip service

By Arnab Pratim Dutta
Published: Thursday 28 February 2013

The government is trying to pump in more money through innovative means into building up India’s infrastructure. In the 12th Five Year Plan, the budgetary estimates suggest that Rs 55,00,000 crore or US $1 trillion worth of investment would be required for setting up of infrastructure projects in the country. During his budget speech, Finance Minister P Chidambaram suggested a motley means of finance, using market mechanism which have hitherto not been fully tapped. “These funds will raise resources and, through take-out finance, credit enhancement and other innovative means, provide long-term, low-cost debt for infrastructure projects,” the budget speech says.

There is also a bit of good news for rural infrastructure projects. The corpus of the National Bank for Agriculture and Rural Development, which finances rural infrastructure projects has been increased to Rs 20,000 crore with an additional component of Rs 5,000 crore. This will be used to construct facilities for safe storage of agriculture commodities. This is a welcome move as current storage facilities are inadequate: as of December 2012, India had storage capacity for only 34.13 million tonnes of food grains as against 82.32 million tonnes of food grain stocks.

At the policy level, India will soon get its own policy for extraction of shale gas, which is gaining prominence in the US as a relatively cleaner fuel than coal. India has identified seven regions with shale deposits, with exploratory wells set up in two of these. A policy is urgently required as shale is extracted by injecting chemicals into the shale formations where the gas is trapped in tiny pores. This process called hydro-fracking uses a cocktail of chemicals, some of which are toxic and can contaminate groundwater.

India’s state electricity utilities are more or less bankrupt. The budget pushes for financial restructuring of these utilities.

As industrialisation grows, India will also require an efficient transportation system. So far, the push has been to create more highways, which is not only polluting but also expensive. This budget is no exception. But at the same time cleaner means of transportation, like waterways, have managed to get a passing reference. In India there are five designated natural waterways. In this budget, the finance minister has added that another one would be set up on the Barak river in Assam.

The problem of setting up of a clean transportation system is immense. Apart from infrastructure it also requires skilled manpower which is a huge bottleneck in the country. Another big problem is the fact that the National Waterways Authority of India has a severe financial and resource crunch which has not been addressed in the budget.


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