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Chidambaram Rewrites Code to Lift Economy from Sickbed

The finance ministry is working on a series of steps to revive investor sentiment and clear bottlenecks in key infrastructure projects, a top official in the ministry told ETon the condition of anonymity. 
The initiatives, a priority for new Finance Minister P Chidambaram, include clearing bottlenecks in key sectors such as roads, power and energy, measures to speed up disinvestment and steps to revive capital markets. 
Chidambaram has met the secretaries from power, roads & highways, and petroleum ministries and asked them to step up the pace of work. 
"In the last quarter, only 100 km of roads were constructed. Power projects totalling 18,000 mw are stuck. The petroleum ministry is yet to clear Cairn's capex proposal despite the prime minister calling up (oil minister) Jaipal Reddy. All this would be addressed in the action plan," the official said. 
The plan would contain a review of each infrastructure sector, the problems faced by them and the steps needed. It would also try to address issues faced by companies in implementing key projects — such as difficulty in obtaining environmental clearance — and suggest workable solutions, the official said.Revival Plan to be Submitted to Singh This Week 
Finance ministry officials worked over the weekend to put together the plan that would be submitted to the prime minister this week, the official said. After getting the PM's approval, a meeting with key stakeholders, which would include the infrastructure ministries, would be called and a time line decided. Later, plans would be submitted for other areas to the PM, the official said. 
In the power sector alone, investments totalling over . 30,000 crore in 10 major projects are stuck for a variety of reasons — ranging from non-availability of coal to environmental clearance, the official quoted earlier said. More than half of India's power plants are fuelled by coal. 
Coal India, which has near-monopoly over coal mining in the country, has been unable to increase production to keep pace with the rapid expansion in generation capacity, particularly by the private sector. Problems related to land acquisition have also hit mining. 
Further, many road and highway projects are entangled in red tape. In several projects, delayed approvals by the Public-Private Partnership Appraisal Committee have led to projects not being awarded. 
The sluggish performance of the infrastructure sector has led to the Planning Commission reviewing its investment target of $1 trillion for the 12th Five-Year Plan. The commission is likely to revise downwards the growth target for the 12th Plan. Planning Commission Deputy Chairman Montek Singh Ahluwalia has warned that growth would be less than 6% this fiscal. 
While the official did not elaborate on the reference to Cairn India, the exploration arm of Vedanta Plc is keen to invest $250 million on exploration and development activities in its Rajasthan block to ramp up output to 300,000 barrels per day (bpd), or 15 million tonnes a year, up from 175,000 bpd in April. The group wants to carry out more seismic surveys and drill 90 wells to realise the full potential of the prolific block in Rajasthan, where Cairn discovered India's biggest onshore oil reserves. It wrote to the oil ministry last month to convene a meeting of the Management Committee of the block to approve fresh investments, but this has not happened so far. 
New power projects with a capacity of more than 30,000 MW are idling or are underutilised because of acute fuel scarcity and high cost of imported coal, the official said. He said if fuel costs are passed on to customers, power producers would be able to use existing capacity and build new plants. 
The government is also ready to defend itself against allegations made by the Comptroller and Auditor General (CAG) on allocation of coal mines, the official said. It is likely to say the government is not a trader of coal and high prices of the fuel would have resulted in higher cement and steel prices. The CAG report is not going to deter the finance ministry from pushing for allocation of coal to fuel-starved power plants, he said. 
Last week, in his first public statement to the media, Chidambaram acknowledged the economic malaise gripping the country and promised to revive investor confidence. "Uppermost in my mind is the duty to regain the confidence of all stakeholders... Our policies have to be modified or fine tuned to meet the expectations of different stakeholders," he said, while noting that some key sectors were under stress. 
Recently the Prime Minister's Office had directed the Cabinet Secretariat to create a project-clearing board that would meet once a month and act as a single-window clearance mechanism for infrastructure projects above . 1,000 crore.