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Paul Noronha

This way: Mr P. Chidambaram, Union Finance Minister, with Mr Ratan Tata, Chairman, Tata Sons, and Mr Henry M. Paulson Jr, US Treasury Secretary, at a meeting in Mumbai on Monday. —

Our Bureau

Mumbai, Oct 29

The Union Finance Minister, Mr P. Chidambaram, said on Monday that the ECB (external commercial borrowings) and investment norms for the infrastructure sector need to be made more flexible.

Emphasising the need for making available more long-term funds for the infrastructure sector, Mr Chidambaram also said that investment guidelines for pension and insurance funds need to be revisited.

Addressing a conference on infrastructure organised by the US-India CEO Forum, Mr Chidambaram said rate of investment in infrastructure has been lagging behind the GDP growth. The current level of investment in infrastructure stands at five per cent and there is a need to increase it to nine per cent of the GDP, he said.

He said corporate bond market also needs to be broadened and deepened.

Mr Chidambaram said that 70 per cent of the funding for infrastructure would come from the public sector and budgetary resources and the rest 30 per cent from private entities. Financing infrastructure is a major challenge and would require relaxation in some norms, he said.

Talking about the mega power projects, Mr Chidambaram urged the US companies to come forward and bid for the projects. “I urge you to participate in the bidding, if not as the engineering or construction partners, as financing partners,” he said.

He felt that the initiative taken to set up dedicated infrastructure funds have been stalled because of the lack of bankable projects and not because of the lack of funds. Talking about the corporate bond markets, he said that the trading volumes have been insignificant and most issues have taken place on a private basis. “We have taken a number of measures and will continue to take steps in order to broaden and deepen the corporate bond market,” he said.

Responding to questions on further liberalisations in the financial sector, Mr Chidambaram said “they should be done in a careful and calibrated manner.

Referring to the recent measures to check funds flow to the stock market through participatory notes, in the capital market, he said that there were concerns from funds flows coming in from unregulated entities. “Our concern is about unregulated entities and inflows from unregulated jurisdiction,” said Mr Chidambaram.

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