Ministries can now clear projects up to Rs 1,000 crore

New Delhi: The government last month authorised ministries and departments to clear investment proposals up to Rs 1,000 crore, instead of seeking approval of the Cabinet Committee on Economic Affairs. The earlier limit was Rs 300 crore.

The move came after road transport and highways minister Nitin Gadkari pushed for it. "This will avoid many layers of approval and work can be awarded in a fast-track manner," an official said.

Rajiv Kumar, a senior fellow with the Centre for Policy Research, said the move was long overdue. "This will reduce paperwork and logjams over clearing of projects," he said.

However, he wondered how many projects up to Rs 1,000 crore are there with the government or public sector units.

Abhijit Banerjee, director-general of the Confederation of Indian Industry said this would help in clearing of projects. "Overall, this is a good move to further boost investor sentiment," he said.

In the last week of August, the CCEA also empowered Gadkari's ministry to amend the model concession agreement for highways when required and to decide the mode of delivery for projects. This means the ministry can on its own decide on key issues related to national highways. Earlier, an inter-ministerial group used to take these decisions. If the proposal got stuck there, it would go the cabinet.

A target of laying 8,500 km of roads has been fixed for 2014-15. In the Union Budget, Finance Minister Arun Jaitley has allocated Rs 37,880 crore for roads.

Meanwhile, the government has also allowed NTPC, the Maharatna public sector power producer, to decide on projects up to Rs 1,500 crore from the current ceiling of Rs 1,000 crore.

In a recent study, CII pegged the requirement for investment at Rs 280 lakh crore ($4.7 trillion) for five years, beginning 2014-15, to make the economy grow by seven per cent a year on an average. The requirement is double the Rs 139 lakh crore ($2.9 trillion) of investments in the previous five years. The economy grew 6.7 per cent a year on an average in the previous five years.

CII expects infrastructure investment to go up from around Rs 24 lakh crore ($500 billion) in the XI plan period to Rs 64.3 lakh crore ($1,071 bn) during 2014/15-2018/19. Investment in infrastructure is estimated to average 7.7 per cent of gross domestic product over the next five years, up from 7.2 per cent during the XI plan period.

The CII study says 40 per cent of the total investment in infrastructure should come from the private sector, lower than the 48 per cent prescribed by the Planning Commission for the 12th plan.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.