Our Bureau

Chennai, Aug 4

A SPECIAL fund to upgrade urban infrastructure and an effective disaster management plan are needed urgently, according to the Assocham President, Mr M.K. Sanghi.

He made the suggestion in the context of the damage to life and property in the last few months due to natural calamities including the recent rain in Mumbai, floods in Gujarat and the tsunami damage in the southern region last December.

There is a need of greater emphasis on infrastructure in large cities and the Government has to set aside a dedicated fund.

Over the last 15 years, there has been a 30-35 per cent increase in urban population and most cities suffer from water shortage. Equal attention should also be paid to roads and power, he said.

Responding to a question, Mr Sanghi said that as much as fund allocation, attention should be paid to fund utilisation and project implementation.

Monitoring by an independent body of experts would ensure that projects are completed on time and costs retained at initial estimates.

Infrastructure gaps could prove the undoing of gains in industry. With competition from other countries, investments could be diverted elsewhere if such issues are not addressed.

Cities such as Bangalore, which has had attracted investments in IT, are bursting at the seams.

In Mumbai, the financial centre, infrastructure development has suffered in the last decade.

Urban development initiatives such as the Bangalore Task Force and Mumbai First are welcome, he said.

Water management should be a key priority in urban and rural areas.

Even minor deficiencies in monsoons have a major effect on agriculture output, he said.

Rural infrastructure too has to be developed to sustain economic growth, he added.

Over 70 per cent of the population is in rural areas but they contribute to about 22 per cent of the GDP.

Any improvement in rural economy would contribute significantly to economic progress.

Energy supply is another crucial area. A single electric bulb in an area of a few sq km cannot be an indicator of connectivity. The Government should fully exploit the opportunities in non-conventional energy wherever possible, Mr Sanghi said.

Non-VAT States could be left behind

ASSOCHAM has expressed concern that the States that have not shifted over to VAT could be left behind in development.

The Assocham President, Mr M.K. Sanghi, said that reports clearly showed that the 21 States that have implemented VAT have observed an average of 15 per cent increase in revenues.

Also, simpler procedures when compared to conventional sales tax regime have been an added advantage.

Industry is concerned that non-VAT States could be left behind because of the higher cost of their products. "For instance, why should the industry or a consumer in any State pay a higher price just because the product is from Tamil Nadu?"

Mr Murali Venkataraman, President of Madras Chamber of Commerce and Industry, said that a study by it has shown that Tamil Nadu's loss in competitive edge is about 5-6 per cent.

Even in States that have a strong manufacturing base, there has not been a loss in revenue due to VAT because the increase in volumes has had a positive effect.

(This article was published in the Business Line print edition dated August 5, 2005)
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